>> From around the globe. It's theCUBE. With digital coverage of IBM Think 2021. Brought to you by IBM. >> Welcome back to theCUBE's ongoing coverage of IBM Think 2021. The virtual cube. You know, the pandemic has caused us to really rethink this whole concept of operational resilience. So we're going to dig into that and talk about the importance of constructing a holistic resilience plan and get the perspective of some really great domain experts. Allen Downs is the Vice President in Global Cloud Security and Resiliency Services at IBM. And he's joined by Ms. Michelle Weston who is the Director of Cloud Security and Resiliency Offerings at IBM. Folks, welcome to theCUBE. Thanks for coming on. >> Thank you. >> Thank you. >> Now, before we get into it, I said, IBM, but I want to ask you Allen, about an announcement you made last month about Kyndryl, new spinout from IBM. What can you tell us? >> Very excited about the name. I think there's a lot of meaning in the name censored around new growth and censored around partnership and relationship. So if you look at the name that was announced, I think it really does typify what we set out to be as a trusted partner in the industry. All born around new growth, censored around strong partnership and relationship. So very pleased and excited. I look forward to the opportunity we have going forward. >> Yeah. Congratulations on that. Add some clarity, Martin Schroeder, new CEO, Cube alum, great exec. Love it. So good luck. Allen, let me stay with you for a second. I mean, operational resilience it means different things to different people. And we know from speaking with CIOs in our community during the pandemic, it doesn't just mean Disaster Recovery. In fact, a lot of CIO said that their business continuing strategy were too focused on DR. Allen, what does operational resilience mean from your perspective? >> So I'll answer it this way. Operational resiliency risk is defined as the quantifiable steps is defined as the quantifiable steps that any client needs to take in order to respond, recover from an unplanned outage. It sits squarely within operational risk and if you think about it operational risk is the kind of non-financial element of risk and defined within that category, operational resiliency risk is trying to identify those steps, trying to identify those steps, both preactive and reactive both preactive and reactive that a client needs to consider that they would have to take in the event of an unplanned disruption or an unplanned outage that would impact their ability to serve their clients or to serve their organization. That's how I define operational resiliency risk. >> Great. And I wonder Michelle if you can add to that, but I think, you know, I sometimes say that the pandemic was like a forced march to digital and part of that was business resilience but you know, where do we go from here? You know, we had 14 months shoved into our face and now we have some time to think about. So how should clients think about evolving their strategies in this regard? >> Yeah, well certainly with respect to what was called NewCo now, Kyndryl, our approach has been advisory-led. We will help clients along this journey. One thing that I'd like to point out and one of the journeys that we've been taking over the last couple of years is it really is about security and resiliency together. If you think of that planning and how to mitigate your operational risk, if the security and resiliency go hand in hand, they're the same people within the organization that are planning for that and worried about it. And so we had already started about three years ago to pull the two together and to have a unified value proposition for clients around security and resiliency both being advisory-led doing everything for a client from project-based to the digital consumption world, which we know clients live in today to a fully managed service all around security and resiliency together. >> Yeah. So, I mean, it's a really important topic. I mean, you heard Chair Powell last month. He was, he was on 60 Minutes saying, well, yeah, yeah. We're worried about inflation but we're way more worried about the security. So, so Allen, where, let's say you're in the virtual conference room with the board of directors, what's that conversation like? Where does it start? >> I think there is a huge concern right now with regards to security and obviously resiliency as well. But if you just think about what we've all been through and what's transpired in the last 12 months, the, what we call the threat landscape has broadened significantly. And therefore clients have had to go through a rapid transformation not just by moving employees to home base, but also their clients having a much higher expectation in terms of access to systems, access to transactions, which are all digital. So you referred to it earlier but the transformation our clients have had to go on driving a higher dependence on those systems that enable them to serve their clients digitally and enable them to and allow the employees to work remotely in this period has increased the dependencies that they have across the environment that are running many of the critical business processes. So the discussion of the boardroom is very much, are we secure? Are we safe? How do we know? How safe and secure and resilient should we be? And based on that facts about how fit, safe and secure should we be, where are we today as an organization? And I think these are the questions that are at the boardroom. It's basically from a resiliency, security perspective where should we be that supports our strategy, vision and our client expectation? And then the second question is very much, where are we today? How do we know that we are secure? How do we know that we can recover from any unplanned or unforeseen disruption to our environments? >> So Michelle, I mean Allen just mentioned the threat surface is expanding and we're just getting started. Everybody's like crazy about 5G, leaning in the Edge, IoT and that's just going to be orders of magnitude by the end of the decade compared to where it is today. So how do you think about the key steps that organizations should take to ensure operational resilience? You know, not only today, but also putting in a roadmap. >> Yeah. Yeah. And one thing that we do know from our clients is those that have actually planned for resiliency and security at the forefront. They tend to do that more effectively and more efficiently. It's much better to do that than to try to do that after an outage. You'll certainly learn a lot but that's not the experience that you want to go through. You want to have that planning and strategy in the forefront as Allen said. In terms of the threat vector, the pandemic brought that on as well. We saw a surgent of cyber attacks, opportunistic attacks. You know, we saw the best of people in the pandemic as well as the worst in people. Some of those attacks were on agencies that were trying to recover or trying to treat the public with respect to the COVID-19 pandemic. So none of us can let our guard down here. I think we can anticipate that that's only going to increase. And with the emergence of these new technologies like Cloud, we know that there's been such a massive benefit to clients. In fact those that were Cloud-enabled sustained their businesses during the pandemic. Full stop. But with that comes a lot more complexity. Those threat vectors increased, 5G, I expect to be the same. So again, resiliency and security have never been more relevant, more important. We see a lot of our clients putting budget there and those that plan for it with a strategic mindset and understand that whatever they have today may be good enough, but in the future they're going to have to invest and continue to evolve that strategy, are those that have done the best. >> Yeah. The bolt-on strategy doesn't really work that well. But, and I, and I wonder if you think about when when we talk to CSOs for example, and you ask them, what's your biggest challenge? They'll say things like lack of talent. We got too many tools. It's just as we're under the hamsters on wheels. So I would think that's, you know, unfortunately for some, but it's good for your, your business. That's a dynamic that you can help with. I mean, you're a services organization. You've got deep expertise in this. So I wonder if you could talk a little bit about that, that lack of talent that skills gap and how you guys address that. >> I think this is really the fit for managed services providers like Kyndryl. Certainly with some of our largest clients, if we look at Pettus as an example, that notion of phone a friend is really important. When it starts to go down, and you're not sure, you know, what you're going to do next, you want the expertise. You want to be able to phone someone and you want to be able to rely on them to help you recover your most critical data. One of the things clients have also been asking us for is a vaulted capability. Almost like the safe deposit box for your data and your critical applications being able to put them somewhere and then in the event of needing to recover, you certainly could call someone to help you do exactly that. >> Allen, I wonder if you could address this. I mean, I like IBM. I was, I'm a customer. I, I trust IBM, what's your relationship? Are you still going to, you know, be able to allow me to tap the pieces that I like and maybe you guys can be more agile in some respects? Maybe you could talk about that a little bit. >> Yeah, sure Dave. And many of our clients we have a long history with and a very positive experience of delivering, you know, market-leading and high, high quality of services and product. The relationship continues. So we will remain very close to IBM and we will continue to work with many of IBM's customers as well, IBM work with our customers going forward. So the relationship I believe whilst the different dynamic, will continue and I believe engenders an opportunity for growth. And, you know, we mentioned it earlier the very name signifies the fact that it's new growth. And I do think that partnership will continue and will continue together to deliver the type of service, the quality of products and services that our clients have you know, enjoyed from IBM over the last number of years. >> Michelle, I might take one of my takeaways from your earlier comments that you guys are hands on, consultative in nature. And I think about the comment I made about a lot of CIOs said we were way too, DR-focused, but when I think about DR, a lot of times it was a checkbox to the board. Hey, we got it. But when was the last time you tested it? Well, we don't test it because it's too risky to test. We do, we do fail over but we don't want to fail back because it's just too risky. Can I stress test? You know, my environment. Are we at the point now where technology and expertise will allow us to do that is that part of what you bring to the table? >> It is exactly what we bring to the table. So from a first of all, from a compliance and regulatory perspective, you no longer have that option. A lot of the auditors are asking you to demonstrate your DR plan. We have technology and I think we've talked about this before. About the automation that we have in our portfolio with resiliency orchestration that allows you to see the risk in your environment on a day-to-day basis, proactively manage it. I tried to recover this. There's a, there's a failure and then you're able to proactively address it. I also give the example from a resiliency work restoration perspective in this very powerful software automation that we have for DR. We've had clients that have come in scheduled a DR Test. It was to be all day they've ordered in lunch. And the DR Test fail over, fail back, took 22 minutes and lunch was canceled. (Dave laughs) >> I love it. >> So that is very powerful and very powerful with an auditor. >> That's awesome. Okay, guys, we got to leave it there. Really great to get the update. Best of luck to you. And congratulations. Thanks for coming on. >> Thank you. >> Thank you so much. >> All right. And thank you for watching. This is Dave Vellante for theCUBE's continuous coverage of IBM Think 2021. Be right back. (calm music)

from the silicon angle media office in Boston Massachusetts it's the queue now here's your host David on tape hi everybody Dave Volante here with Stu minumum we have some breaking analysis we're gonna break down the acquisition of IBM Red Hat by IBM was announced today that it closed Stu was originally announced in October a 34 billion dollar acquisition so not a surprise surprise that it closed a little bit earlier than people thought people would thinkin you know well into the second half closed in July they got through all the all the issues in Europe what does this mean in your view to the industry yeah so Dave we did a lot of analysis when the deal was announced absolutely the the cloud and the ripples of change that are happening because of cloud are the impetus for this and you know the the question we've been having for years Dave is you know how many companies can stay kind of independent in you know their swimlane to what they're doing or are we going to see more massive consolidations we're not that far off of the 67 billion dollar acquisition of Dell buying EMC to go heavily into the enterprise market and of course there are cloud implications what happened there and you know we're watching the growth of cloud what's happening in the developer world you know we've watched Red Hat for a long time and you know Red Hat has a nice position in the world and it carved themselves out a nice role into what has been emerging as hybrid and multi cloud and in my opinion that's you know the number one reason why arvind and the IBM team you know when to take that 20-year partnership and turn it into you know now just part of the IBM portfolio Arvind Krishna executive at IBM a longtime player there so the the the deal is so you talked about Dells acquisition we've talked a lot about the VMware model keeping the company separate and of course Red Hat is not going to be a separately traded public company it is going to be a distinct unit inside of IBM's cloud and cognitive software group as I understand it is that right so the question is will it be reported separately or is it going to be oh we're gonna throw everything into our cloud number yeah so Dave this is where all of us that have watched and known IBM you know for our entire careers because they've been around over a hundred years on ask what's going to happen so from a reporting structure Jim Whitehurst reports to Ginny from a Wall Street standpoint it sounds like it's gonna be just thrown into the cloud piece you know Dave isn't it that the the the standard practice today that you throw lots of stuff in there so we can't figure out what your cloud business really is I mean let's look at Oracle or even Microsoft and what they had you know Amazon's probably the only one that clearly differentiates you know this is revenue that we all understand is cloud and can you know touch and feel it so sure I IBM you know you've got all of the the piece that used to be soft layer it's now the IBM cloud piece there are lots of software pieces in that mix the cloud and cognitive is a big umbrella and you know Red Hat adds a few billion dollars worth of revenue into that stream so IBM's assumptions here juni talks a lot about chapter two chapter one was a lot of front-end systems that sort of the growth was everybody thought everything was going into the cloud that's really not the way it is 80% of the workloads are still on Prem and in Chapter two was all about you know connecting those to any cloud multi-cloud heard her words the IBM cloud or the Amazon Google or Microsoft cloud etc etc she made the statement that that we are the only hybrid multi-cloud open source company okay I guess that's true does it matter that they're the only hybrid multi-cloud open source company and are they yeah so I mean Dave anytime a vendor tries to paint themselves as the number one or you know leader in the space it's you know that's how they're defining it that's not how customers think of it customers you know don't think is much about whether it's multi cloud or hybrid cloud they're doing cloud and they're working with you know more than one supplier it is very rare that you find somebody I'm all-in and then you dig in oh yeah wait I'm using office 365 and Salesforce and oh wait there was that cool new thing that Google announced that somebody off on the sides doing so we understand that today it's a multi cloud world tomorrow to be a multi cloud we're absolutely open source is growing you know at great leaps and bounds Red Hat is you know the you know best example we've had of that that trend something I've been watching for the last 20 years and you know it is impressive to see it but you know even when you talk to customers of you know most customers are not you know flag-waving I must do everything open-source you know that they have a little bit more nuanced view of it sure lots of companies are participating in contributing to open source but you know I've yet to talk to too many companies that were like well when I'm making this decision you know this is absolutely what it is am i concerned about my overall costs and I'm concerned about transparency am i concerned about you know security and how fast I can get things resolved and by the way open-source can help with a lot of those things that's what they need to think about but look IBM you know had a longtime partnership with Red Hat Red Hat has a strong position in the marketplace but they're not the only ones there you know you mentioned VMware Dave VMware cross has a strong play across multi cloud environments you know we see Red Hat at all of the cloud shows you see yeah IBM at many of the cloud shows but you've got Cisco out there with their play it is still you know this this chapter - if you agree with Ginny's terminology we are relatively early in that but you know IBM I believe is strengthened in their positioning I don't think it radically changes the landscape just because you know Red Hat is still going to stay you know working with the Amazons and Microsoft and Google's and and and other players out there so it doesn't dramatically change the landscape it just consolidates two players that already worked closely let me ask a question so I mean was clearly positioning this as a cloud play you know generally and you know in a multi cloud specifically is this a cloud play okay um so I'll say yes but Dave so absolutely the future and where the growth for Red Hat and where IBM and for this thirty four billion dollars to be successful the tip of the spear is open shift and therefore you know how does that new cloud native multi cloud environment you know where do they play but at its core you know red heads still Linux Red Hat Enterprise Linux you know is it stills you know that is the primary driver of revenue and Linux isn't going away as a matter of fact Linux is growing Microsoft you know just revealed that there are more Linux workloads sitting in Azure than there are windows we already knew that there were you know strong Linux out there and Microsoft is embrace Linux we saw Satya Nadella at Red Hat summit and you know we've seen that proliferation of linux out there so linux is still you know growing in it where it's being used out there and in the cloud you know linux is what most people are using so the reason why I think this acquisition is interesting Jim Whitehurst today said publicly that it was a great deal that IBM was getting but then he couched he said of course it's a great deal for our shareholders too so and Ginni chimed in and said yes it was a fair deal okay fine 34 billion you know we'll see the reason why I think IBM likes this deal and IBM you know generally has been been good over in history with acquisitions you know clearly some mega acquisitions like PwC which was transformative me we have time to talk about that Cognos and some of the other software acquisitions done quite well not a hundred percent but the reason why I think IBM likes this deal is because it's a good cash flow deal so I think in many ways and they don't talk about this because it's not sexy marketing but iBM is a services company over 60% of the company's revenue comes from professional services IBM loves complexity because they can bring in services throw the big blue blanket around you and do a lot of integration work and the reason is that I think this is an interesting acquisition from from a financial standpoint and Ginny says this all the time this is not about cost synergies this is about revenue opportunities when you try to put everything in the cloud you always run into the back-end systems and her point is that those back-end systems need to be modernized how do you modernize those back-end systems openshift it's not trivial to do that you need services and so iBM has a large install base probably by my estimate you know certainly tens of billions of dollars of opportunity there to modernize back-end systems using Red Hat technology and that means that it's a front-loaded deal from a cash flow standpoint that they will find automatically revenue Cyn to plug in to IBM's captive install base what are your thoughts yeah Dave III think that your analysis is spot-on so RedHat has been one of these most consistent you know revenue companies out there you steadily when they went from a billion dollars to now they're right around three billion dollars they had the March to five billion dollars they had a couple of minor blips in their quarterly earnings but if you plug in that IBM services organization you really have the opportunity to supercharge this is not the opportunity is to have that that huge IBM services organization really helped you know grow those engagements do more openshift you know get more Linux help ansible you know really become the standard for you know automation in the modern workplace the challenge is that too many IBM people get involved because the the thing that everybody's a little worried about is IBM's done well with a lot of those acquisitions but they don't leave them stand alone even you know VMware for many years was a standalone company today VMware in Dell they're one company they're in lockstep from a management standpoint and they're working closely together what differentiates RedHat is you know iBM has groups that are much larger than RedHat that do some of the same things but RedHat with their open-source mission and and where they're driving things and the innovation they drive they move a little bit faster than IBM traditionally does so can will the Red Hat brand the Red Hat people and Red Hat still stay independent enough so that they can till you know hop on that next wave you know they they jumped early into kubernetes and that was the wave that really helped them drive for what they're doing the open shift you know even Dave you know Red Hat ahead bought core OS which was a smaller company moving even faster than Red Hat and while they've done a really good job of integrating those people absolutely from what I've heard it is slowed things down a little bit just because Red Hat compared to core OS was a much bigger company and of course IBM is a be a myth compared to Red Hat so will they throw these groups together and you know who will be making the decisions and can they you know maintain that that culture and that growth mindset well the point is structure we bring up VMware a lot as the model and of course when EMC bought VMware for paltry six hundred million six thirty five million dollars it folded it in and then spun it back out which was the right move certainly allowed the ecosystem to blossom I don't think IBM is gonna take that same approach blue wash is the term they'll probably blue wash that now cuz no Dave they said iBM has said they will not blue eyes there's no purple red stay separate absolutely there's concerns you know so to get those revenue synergies there's there's you're gonna have to plug into IBM systems and that requires some some work and IBM generally good at that so we'll see we'll keep our eyes on that it's but but I would predict that IBM is not going to do a VMware like well it's going to be some kind of hybrid Dave one of the other things is you talked about so Jim Whitehurst you know executive respective had him on the cube a lot he's reporting to Ginny you know the question is is this Ginny's last big move and who replaces her yeah let's talk about succession planning so a lot of a lot of rumors that Whitehurst is is next he's 52 years old I've said I don't I don't think they would do that but but let's talk about it first of all just you know Jim white her side sort of interviewed him the number of times but but you know I'm quite well you think even watch the job so you know I talked with Jim a little bit at red hat summit you know he kind of makes light of it he said you know knowing IBM the way we all know IBM IBM has always taken somebody from inside to do that he feels that he has a strong mission still to drive Red Hat he is super passionate about Red Hat he wrote a book book about the open source culture and is still driving that so I think from everything I see from him that's still the job that he loves and wants to do and you know it's a very different challenge to run IBM I'm not saying he would turn it down if that was the direction that it went if it went down to it but I did not see him angling and positioning like that would be where he wants to go well and of course you know Jim is from North Carolina he's got that kind of southern folksy demeanor you know comes across as the so the nicest guy in the room he's also the smartest guy in the room but oh we'll see we'll see what happens there I've said that I think Martin Schroder is going to be the next CEO of IBM Martin Schroder did three years of combat duty as the CFO in in what was a tough time for IBM to be a CFO they were going through those big transitions talking about you know they had to had to do the the SoftLayer acquisition they had to put together those strategic initiatives and so he's has he has CFO chops so he understands finance deeply he ran you know when IBM's big services business he's now responsible for IBM's revenue generation he's a spokesperson you know in many ways for the company he's like the prototypical choice he would not be surprising at all to see IBM plug him right in a little bit of history as you know still him a bit of a history historian of the industry have been around for a while John Akers back in the early 1990s when IBM's mainframe business was was tanking and the whole company was was tanking and it was at the risk of actually believe it or not running out of money they were gonna split up the company because the industry was breaking apart Intel and microprocessors Microsoft and software C gated disk drives you know Oracle and databases and to be more competitive from a product standpoint they were gonna split the company up into pieces Gerstner came in and said no way Gerson it was you know CEO of American Express said no that's not how customers want to buy he bought PwC for a song compared to what Carly Fiorina at HP a Carly Fiorina at HP wanted to pay I think 15 billion for it I want to say IBM paid five billion or maybe even less for PwC it completely transformed the company it transformed IBM into a services company and that's where what IBM is today they don't like when you say that but that's where the revenue was coming from what that did now and they also started to buy software companies IBM was restricted from getting into applications for years and years and years because of the DOJ because they owned the mainframe they had a monopoly while Microsoft and Intel changed all that IBM started to buy software companies and bought lots of them so they became a services company with a collection of software assets and the main mainframe and you know the power they have a storage business and you know Finance I'd be a global finance business etc etc so my my point is I'm not sure Jim Whitehurst would want to run that you know it's it's kind of messy now what you need run that is somebody who really understands finance knows how to turn the knobs and that's why I think you know Martin Schroeder is actually an excellent pick for that to keep the cash flow going to keep the dividend going to keep the stock buybacks going it's still in my view not a growth play I think there's certainly near-term growth that can be had by modernizing applications but I don't look at IBM as a growth company I look at IBM as a portfolio company that throws off a lot of cash and if and when the market stops rewarding growth and profit list growth a company like IBM will become more favorable to investors yeah and the question at the end of the day is after spending thirty four billion dollars for red hat does IBM help weather the storm of what is happening with the phenomenal growth of AWS the changes happening in Microsoft build more of a relationship than they've already had with Google and help position themselves for this next wave of IT there's IBM helped create a lot of the waves that you know happen in IT well the pure play cloud players are in it for the long game you know you know Amazon's philosophy is give tools to builders and allow them to disrupt the you know traditional old guard whether it's old guard technology companies or old guard industry players and you've seen the stat of how many Fortune 1000 companies or you know have gone out of business in the last 20 or 30 years or whatever it is that's going to continue and Amazon and and certainly Google and Microsoft want to support that disruption by providing cloud tooling and put the data in the hands of people that allows them to create new business models now that doesn't mean everybody's gonna throw up there mainframes it's it's not gonna happen it's certainly not gonna happen overnight and probably will never happen but I just don't see how IBM becomes a growth company in that scenario the growth is going to be continue to be with the cloud well but Dave we had seen IBM I'd say struggle a little bit when it comes to the the developers these days and the Red Hat acquisition is definitely going to be a boon to them in this space because Red Hat all about the developers that that's what you know that their customers are so you know that that's such a huge community that they've already tapped into so Ginny has said this hybrid multi-cloud is a chapter two with a trillion dollar opportunity so who else is going after that trillion dollar opportunity let's let's lay it out there who are the multi cloud players VMware obviously IBM Red Hat with open shift is in there Google with anthos Cisco is coming at it from a network perspective so they have coming at it from their position of strength even though you know you know they're relatively new entrants well ever everybody wants to be the new management layer in this multi cloud environment what VMware had done is had you know vCenter became you know the console for everyone as they were consolidating all of their silos and when I go to a multi cloud environment right where do I live you know Microsoft has a strong play there that's the other you know VMware IBM Red Hat anthos Google Mentos Cisco and Microsoft yeah and of course the one that while they won't say that they are multi cloud you can't talk about multi cloud without talking about Amazon because Amazon is a piece of everyone's cloud environment we were seeing what they're doing with outpost there so they are the kind of Spectre looming over this entire multi-cloud discuss yeah right on I think you got to put Amazon into that mix they will be an entrance into this multi cloud play and it's not gonna be a winner-take-all deal I could say cisco is coming at it from a position of networking strength Microsoft has its software estate and it's gonna do very well there IBM Red Hat coming at it from a standpoint of modernizing applications and there's a services could play and services component there and VMware of course coming at it from the the infrastructure operating system I don't see Oracle as interested in that market there may be some smaller players like turbo anomic you know who probably get gobbled up by one of these guys that we just mentioned but that really is the landscape and this is you know five six companies a trillion dollars there's plenty to go around all right Stu final thoughts on on the the Red Hat news the IBM news that they've finalized the Red Hat acquisition yes so you know what you want to look for is you know first of all you know what's happening organizationally you know if open shift is the primary you know the the tip of the sphere what we're talking about here for this you know cloud native multi-cloud world you know what does you know the IBM Cloud messaging looked like they're gonna have an analyst event here in a couple of weeks that you know that they've invited all the analysts to going into what does that cloud portfolio looks like how do they sort through all of the kubernetes options that they've had today do they try to elevate IBM cloud to be a stronger player or will they let Red Hat continue to play across all of the cloud environments that they have so you know organization and product positioning of the two things that I'm looking at the most Tom Siebel said publicly yesterday that IBM is a great company national international treasure but they miss cloud and they missed a I I wouldn't agree totally they didn't miss cloud they were late to cloud they had to buy software they're in cloud just like Oracle's in cloud not as competitive as the AWS cloud but they're they've got a cloud yeah HP doesn't have a cloud Dell doesn't have a cloud these these two companies that I just mentioned do AI yeah they're not sound of generalized AI like what Google and Amazon and Facebook and Microsoft are doing IBM's trying to solve you know big chewy problems iBM is a services company as they said so you know Watson you see a lot of negative stories about Watson but Watson requires a lot of services to make it work and it's as they say solving different problems so they're a player in AI multi cloud is new and this move the acquisition of red hat yes thirty four billion dollars expensive it's not gonna be pretty on the balance sheet but they get good cash flow so they'll deal with that over time it puts them right in the mix as a leader in multi cloud so thanks to for breaking down the the acquisition and thank you for watching this is Dave Volante what's do min and then we'll see you next time

>> live from San Francisco, California. It's the Q covering the IBM Chief Data Officer Summit brought to you by IBM. >> Welcome back to Fisherman's Fisherman's Wharf in San Francisco. Everybody, my name is David wanted. You're watching the Cube, the leader in live tech coverage, you ought to events. We extract the signal from the noise. We're here. The IBM CDO event. This is the 10th anniversary of this event. Caitlin Hallford is here. She's the director of a I Accelerator and client success at IBM. Caitlin, great to see you again. Wow. 10 years. Amazing. They and Carlo Apple Apple Glace e is here. Who is the program director for data and a I at IBM. Because you again, my friend. Thanks for coming on to Cuba. Lums. Wow, this is 10 years, and I think the Cube is covered. Probably eight of these now. Yeah, kind of. We bounce between San Francisco and Boston to great places for CEOs. Good places to have intimate events, but and you're taking it global. I understand. Congratulations. Congratulations on the promotion. Thank you. Going. Thank you so much. >> So we, as you know well are well, no. We started our chief date officer summits in San Francisco here, and it's gone 2014. So this is our 10th 1 We do two a year. We found we really have a unique cohort of clients. The join us about 100 40 in San Francisco on the spring 140 in Boston in the fall, and we're here celebrating the 10th 10 Summit. >> So, Carlo, talk about your role and then let's get into how you guys, you know, work together. How you hand the baton way we'll get to the client piece. >> So I lead the Data Center League team, which is a group within our product development, working side by side with clients really to understand their needs as well developed, use cases on our platform and tools and make sure we are able to deliver on those. And then we work closely with the CDO team, the global CEO team on best practices, what patterns they're seeing from an architecture perspective. Make sure that our platforms really incorporating that stuff. >> And if I recall the data science that lead team is its presales correct and could >> be posted that it could, it really depends on the client, so it could be prior to them buying software or after they bought the software. If they need the help, we can also come in. >> Okay, so? So it can be a for pay service. Is that correct or Yeah, we can >> before pay. Or sometimes we do it based on just our relation with >> It's kind of a mixed then. Right? Okay, so you're learning the client's learning, so they're obviously good, good customers. And so you want to treat him right >> now? How do you guys work >> together? Maybe Caitlin, you can explain. The two organizations >> were often the early testers, early adopters of some of the capabilities. And so what we'll do is we'll test will literally will prove it out of skill internally using IBM itself as an example. And then, as we build out the capability, work with Carlo and his team to really drive that in a product and drive that into market, and we share a lot of client relationships where CEOs come to us, they're want advice and counsel on best practices across the organization. And they're looking for latest applications to deploy deploy known environments and so we can capture a lot of that feedback in some of the market user testing proved that out. Using IBM is an example and then work with you to really commercialized and bring it to market in the most efficient manner. >> You were talking this morning. You had a picture up of the first CDO event. No Internet, no wife in the basement. I love it. So how is this evolved from a theme standpoint? What do you What are the patterns? Sure. So when >> we started this, it was really a response. Thio primarily financial service is sector regulatory requirements, trying to get data right to meet those regulatory compliance initiatives. Defensive posture certainly weren't driving transformation within their enterprises. And what I've seen is a couple of those core elements are still key for us or data governance and data management. And some of those security access controls are always going to be important. But we're finding his videos more and more, have expanded scope of responsibilities with the enterprise they're looked at as a leader. They're no longer sitting within a c i o function there either appear or, you know, working in partnership with, and they're driving enterprise wide, you know, initiatives for the for their enterprises and organizations, which has been great to see. >> So we all remember when you know how very and declared data science was gonna be the number one job, and it actually kind of has become. I think I saw somewhere, maybe in Glass door was anointed that the top job, which is >> kind of cool to see. So what are you seeing >> with customers, Carlo? You guys, you have these these blueprints, you're now applying them, accelerating different industries. You mentioned health care this morning. >> What are some >> of those industry accelerators And how is that actually coming to fruition? Yes. >> So some of the things we're seeing is speaking of financial clients way go into a lot of them. We do these one on one engagements, we build them from custom. We co create these engineering solutions, our platform, and we're seeing patterns, patterns around different use cases that are coming up over and over again. And the one thing about data science Aye, aye. It's difficult to develop a solution because everybody's date is different. Everybody's business is different. So what we're trying to do is build these. We can't just build a widget that's going to solve the problem, because then you have to force your data into that, and we're seeing that that doesn't really work. So building a platform for these clients. But these accelerators, which are a set of core code source code notebooks, industry models in terms a CZ wells dashboards that allow them to quickly build out these use cases around a turn or segmentation on dhe. You know some other models we can grab the box provide the models, provide the know how with the source code, as well as a way for them to train them, deploy them and operationalize them in an organization. That's kind of what we're doing. >> You prime the pump >> prime minute pump, we call them there right now, we're doing client in eights for wealth management, and we're doing that, ref SS. And they come right on the box of our cloudpack for data platform. You could quickly click and install button, and in there you'll get the sample data files. You get no books. You get industry terms, your governance capability, as well as deployed dashboards and models. >> So talk more about >> cloudpack for data. What's inside of that brought back the >> data is a collection of micro Service's Andi. It includes a lot of things that we bring to market to help customers with their journey things from like data ingestion collection to all the way Thio, eh? I model development from building your models to deploying them to actually infusing them in your business process with bias detection or integration way have a lot of capability. Part >> of it's actually tooling. It's not just sort of so how to Pdf >> dualism entire platform eso. So the platform itself has everything you need an organization to kind of go from an idea to data ingestion and governance and management all the way to model training, development, deployment into integration into your business process. >> Now Caitlin, in the early days of the CDO, saw CDO emerging in healthcare, financialservices and government. And now it's kind of gone mainstream to the point where we had Mark Clare on who's the head of data neighborhood AstraZeneca. And he said, I'm not taking the CDO title, you know, because I'm all about data enablement and CDO. You know, title has sort of evolved. What have you seen? It's got clearly gone mainstream Yep. What are you seeing? In terms of adoption of that, that role and its impact on organizations, >> So couple of transit has been interesting both domestically and internationally as well. So we're seeing a lot of growth outside of the U. S. So we did our first inaugural summit in Tokyo. In Japan, there's a number of day leaders in Japan that are really eager to jump start their transformation initiatives. Also did our first Dubai summit. Middle East and Africa will be in South Africa next month at another studio summit. And what I'm seeing is outside of North America a lot of activity and interest in creating an enabling studio light capability. Data Leader, Like, um, and some of these guys, I think we're gonna leapfrog ahead. I think they're going to just absolutely jump jump ahead and in parallel, those traditional industries, you know, there's a new federal legislation coming down by year end for most federal agencies to appoint a chief data officer. So, you know, Washington, D. C. Is is hopping right now, we're getting a number of agencies requesting advice and counsel on how to set up the office how to be successful I think there's some great opportunity in those traditional industries and also seeing it, you know, outside the U. S. And cross nontraditional, >> you say >> Jump ahead. You mean jump ahead of where maybe some of the U. S. >> Absolute best? Absolutely. And I'm >> seeing a trend where you know, a lot of CEOs they're moving. They're really closer to the line of business, right? They're moving outside of technology, but they have to be technology savvy. They have a team of engineers and data scientists. So there is really an important role in every organization that I'm seeing for every client I go to. It's a little different, but you're right, it's it's definitely up and coming. Role is very important for especially for digital transformation. >> This is so good. I was gonna say one of the ways they are teens really, partner Well, together, I think is weaken source some of these in terms of enabling that you know, acceleration and leap frog. What are those pain points or use cases in traditional data management space? You know, the metadata. So I think you talk with Steven earlier about how we're doing some automated meditate a generation and really using a i t. O instead of manually having to label and tag that we're able to generate about 85% of our labels internally and drive that into existing product. Carlos using. And our clients are saying, Hey, we're spending, you know, hundreds of millions of dollars and we've got teams of massive teams of people manual work. And so we're able to recognize it, adopts something like that, press internally and then work with you guys >> actually think of every detail developer out there that has to go figure out what this date is. If you have a tool which we're trying to cooperate the platform based on the guidance from the CDO Global CEO team, we can automatically create that metadata are likely ingested and provide into platform so that data scientists can start to get value out >> of it quickly. So we heard Martin Schroeder talked about digital trade and public policy, and he said there were three things free flow of data. Unless it doesn't make sense like personal information prevent data localization mandates, yeah, and then protect algorithms and source code, which is an I P protection thing. So I'm interested in how your customers air Reacting to that framework, I presume the protect the algorithms and source code I p. That's near and dear right? They want to make sure that you're not taking models and then giving it to their competitors. >> Absolutely. And we talk about that every time we go in there and we work on projects. What's the I p? You know, how do we manage this? And you know, what we bring to the table with the accelerators is to help them jump start them right, even though that it's kind of our a p we created, but we give it to them and then what they derive from that when they incorporate their data, which is their i p, and create new models, that is then their i. P. So those air complicated questions and every company is a little different on what they're worried about with that, so but many banks, we give them all the I P to make sure that they're comfortable and especially in financial service is but some other spaces. It's very competitive. And then I was worried about it because it's, ah, known space. A lot of the algorithm for youse are all open source. They're known algorithms, so there's not a lot of problem there. >> It's how you apply them. That's >> exactly right how you apply them in that boundary of what >> is P, What's not. It's kind of >> fuzzy, >> and we encourage our clients a lot of times to drive that for >> the >> organisation, for us, internally, GDP, our readiness, it was occurring to the business unit level functional area. So it was, you know, we weren't where we needed to be in terms of achieving compliance. And we have the CEO office took ownership of that across the business and got it where we needed to be. And so we often encourage our clients to take ownership of something like that and use it as an opportunity to differentiate. >> And I talked about the whole time of clients. Their data is impor onto them. Them training models with that data for some new making new decisions is their unique value. Prop In there, I'd be so so we encourage them to make sure they're aware that don't just tore their data in any can, um, service out there model because they could be giving away their intellectual property, and it's important. Didn't understand that. >> So that's a complicated one. Write the piece and the other two seem to be even tougher. And some regards, like the free flow of data. I could see a lot of governments not wanting the free flow of data, but and the client is in the middle. OK, d'oh. Government is gonna adjudicate. What's that conversation like? The example that he gave was, maybe was interpolate. If it's if it's information about baggage claims, you can you can use the Blockchain and crypt it and then only see the data at the other end. So that was actually, I thought, a good example. Why do you want to restrict that flow of data? But if it's personal information, keep it in country. But how is that conversation going with clients? >> Leo. Those can involve depending on the country, right and where you're at in the industry. >> But some Western countries are strict about that. >> Absolutely. And this is why we've created a platform that allows for data virtualization. We use Cooper nannies and technologies under the covers so that you can manage that in different locations. You could manage it across. Ah, hybrid of data centers or hybrid of public cloud vendors. And it allows you to still have one business application, and you can kind of do some of the separation and even separation of data. So there's there's, there's, there's an approach there, you know. But you gotta do a balance. Balance it. You gotta balance between innovation, digital transformation and how much you wanna, you know, govern so governs important. And then, you know. But for some projects, we may want to just quickly prototype. So there's a balance there, too. >> Well, that data virtualization tech is interesting because it gets the other piece, which was prevent data localization mandates. But if there is a mandate and we know that some countries aren't going to relax that mandate, you have, ah, a technical solution for that >> architecture that will support that. And that's a big investment for us right now. And where we're doing a lot of work in that space. Obviously, with red hat, you saw partnership or acquisition. So that's been >> really Yeah, I heard something about that's important. That's that's that's a big part of Chapter two. Yeah, all right. We'll give you the final world Caitlyn on the spring. I guess it's not spring it. Secondly, this summer, right? CDO event? >> No, it's been agreed. First day. So we kicked off. Today. We've got a full set of client panel's tomorrow. We've got some announcements around our meta data that I mentioned. Risk insights is a really cool offering. We'll be talking more about. We also have cognitive support. This is another one. Our clients that I really wanted to help with some of their support back in systems. So a lot of exciting announcements, new thought leadership coming out. It's been a great event and looking forward to the next next day. >> Well, I love the fact >> that you guys have have tied data science into the sea. Sweet roll. You guys have done a great job, I think, better than anybody in terms of of, of really advocating for the chief data officer. And this is a great event because it's piers talking. Appears a lot of private conversations going on. So congratulations on all the success and continued success worldwide. >> Thank you so much. Thank you, Dave. >> You welcome. Keep it right there, everybody. We'll be back with our next guest. Ready for this short break. We have a panel coming up. This is David. Dante. You're >> watching the Cube from IBM CDO right back.

>> Live from San Francisco, California, it's theCUBE covering the IBM Chief Data Officer Summit. Brought to you by IBM. >> Hi everybody, welcome back to theCUBE's coverage of the IBM Chief Data Officer Event. We're here at Fisherman's Wharf in San Francisco at the Centric Hyatt Hotel. This is the 10th anniversary of IBM's Chief Data Officer Summits. In the recent years, anyway, they do one in San Francisco and one in Boston each year, and theCUBE has covered a number of them. I think this is our eighth CDO conference. I'm Dave Vellante, and theCUBE, we like to go out, especially to events like this that are intimate, there's about 140 chief data officers here. We've had the chief data officer from AstraZeneca on, even though he doesn't take that title. We've got a panel coming up later on in the day. And I want to talk about the evolution of that role. The chief data officer emerged out of kind of a wonky, back-office role. It was all about 10, 12 years ago, data quality, master data management, governance, compliance. And as the whole big data meme came into focus and people were realizing that data is the new source of competitive advantage, that data was going to be a source of innovation, what happened was that role emerged, that CDO, chief data officer role, emerged out of the back office and came right to the front and center. And the chief data officer really started to better understand and help companies understand how to monetize the data. Now monetization of data could mean more revenue. It could mean cutting costs. It could mean lowering risk. It could mean, in a hospital situation, saving lives, sort of broad definition of monetization. But it was really understanding how data contributed to value, and then finding ways to operationalize that to speed up time to value, to lower cost, to lower risk. And that required a lot of things. It required new skill sets, new training. It required a partnership with the lines of business. It required new technologies like artificial intelligence, which have just only recently come into a point where it's gone mainstream. Of course, when I started in the business several years ago, AI was the hot topic, but you didn't have the compute power. You didn't have the data, you didn't have the cloud. So we see the new innovation engine, not as Moore's Law, the doubling of transistors every 18 months, doubling of performance. Really no, we see the new innovation cocktail as data as the substrate, applying machine intelligence to that data, and then scaling it with the cloud. And through that cloud model, being able to attract startups and innovation. I come back to the chief data officer here, and IBM Chief Data Officer Summit, that's really where the chief data officer comes in. Now, the role in the organization is fuzzy. If you ask people what's a chief data officer, you'll get 20 different answers. Many answers are focused on compliance, particularly in what emerged, again, in those regulated industries: financial service, healthcare, and government. Those are the first to have chief data officers. But now CDOs have gone mainstream. So what we're seeing here from IBM is the broadening of that role and that definition and those responsibilities. Confusing things is the chief digital officer or the chief analytics officer. Those are roles that have also emerged, so there's a lot of overlap and a lot of fuzziness. To whom should the chief data officer report? Many say it should not be the CIO. Many say they should be peers. Many say the CIO's responsibility is similar to the chief data officer, getting value out of data, although I would argue that's never really been the case. The role of the CIO has largely been to make sure that the technology infrastructure works and that applications are delivered with high availability, with great performance, and are able to be developed in an agile manner. That's sort of a more recent sort of phenomenon that's come forth. And the chief digital officer is really around the company's face. What does that company's brand look like? What does that company's go-to-market look like? What does the customer see? Whereas the chief data officer's really been around the data strategy, what the sort of framework should be around compliance and governance, and, again, monetization. Not that they're responsible for the monetization, but they responsible for setting that framework and then communicating it across the company, accelerating the skill sets and the training of existing staff and complementing with new staff and really driving that framework throughout the organization in partnership with the chief digital officer, the chief analytics officer, and the chief information officer. That's how I see it anyway. Martin Schroeder, the senior vice president of IBM, came on today with Inderpal Bhandari, who is the chief data officer of IBM, the global chief data officer. Martin Schroeder used to be the CFO at IBM. He talked a lot, kind of borrowing from Ginni Rometty's themes in previous conferences, chapter one of digital which he called random acts of digital, and chapter two is how to take this mainstream. IBM makes a big deal out of the fact that it doesn't appropriate your data, particularly your personal data, to sell ads. IBM's obviously in the B2B business, so that's IBM's little back-ended shot at Google and Facebook and Amazon who obviously appropriate our data to sell ads or sell goods. IBM doesn't do that. I'm interested in IBM's opinion on big tech. There's a lot of conversations now. Elizabeth Warren wants to break up big tech. IBM was under the watchful eye of the DOJ 25 years ago, 30 years ago. IBM essentially had a monopoly in the business, and the DOJ wanted to make sure that IBM wasn't using that monopoly to hurt consumers and competitors. Now what IBM did, the DOJ ruled that IBM had to separate its applications business, actually couldn't be in the applications business. Another ruling was that they had to publish the interfaces to IBM mainframes so that competitors could actually build plug-compatible products. That was the world back then. It was all about peripherals plugging into mainframes and sort of applications being developed. So the DOJ took away IBM's power. Fast forward 30 years, now we're hearing Google, Amazon, and Facebook coming under fire from politicians. Should they break up those companies? Now those companies are probably the three leaders in AI. IBM might debate that. I think generally, at theCUBE and SiliconANGLE, we believe that those three companies are leading the charge in AI, along with China Inc: Alibaba, Tencent, Baidu, et cetera, and the Chinese government. So here's the question. What would happen if you broke up big tech? I would surmise that if you break up big tech, those little techs that you break up, Amazon Web Services, WhatsApp, Instagram, those little techs would get bigger. Now, however, the government is implying that it wants to break those up because those entities have access to our data. Google's got access to all the search data. If you start splitting them up, that'll make it harder for them to leverage that data. I would argue those small techs would get bigger, number one. Number two, I would argue if you're worried about China, which clearly you're seeing President Trump is worried about China, placing tariffs on China, playing hardball with China, which is not necessarily a bad thing. In fact, I think it's a good thing because China has been accused, and we all know, of taking IP, stealing IP essentially, and really not putting in those IP protections. So, okay, playing hardball to try to get a quid pro quo on IP protections is a good thing. Not good for trade long term. I'd like to see those trade barriers go away, but if it's a negotiation tactic, okay. I can live with it. However, going after the three AI leaders, Amazon, Facebook, and Google, and trying to take them down or break them up, actually, if you're a nationalist, could be a bad thing. Why would you want to handcuff the AI leaders? Third point is unless they're breaking the law. So I think that should be the decision point. Are those three companies, and others, using monopoly power to thwart competition? I would argue that Microsoft actually did use its monopoly power back in the '80s and '90s, in particular in the '90s, when it put Netscape out of business, it put Lotus out of business, it put WordPerfect out of business, it put Novell out of the business. Now, maybe those are strong words, but in fact, Microsoft's bundling, its pricing practices, caught those companies off guard. Remember, Jim Barksdale, the CEO of Netscape, said we don't need the browser. He was wrong. Microsoft killed Netscape by bundling Internet Explorer into its operating system. So the DOJ stepped in, some would argue too late, and put handcuffs on Microsoft so they couldn't use that monopoly power. And I would argue that you saw from that two things. One, granted, Microsoft was overly focused on Windows. That was kind of their raison d'etre, and they missed a lot of other opportunities. But the DOJ definitely slowed them down, and I think appropriately. And if out of that myopic focus on Windows, and to a certain extent, the Department of Justice and the government, the FTC as well, you saw the emergence of internet companies. Now, Microsoft did a major pivot to the internet. They didn't do a major pivot to the cloud until Satya Nadella came in, and now Microsoft is one of those other big tech companies that is under the watchful eye. But I think Microsoft went through that and perhaps learned its lesson. We'll see what happens with Facebook, Google, and Amazon. Facebook, in particular, seems to be conflicted right now. Should we take down a video that has somewhat fake news implications or is a deep hack? Or should we just dial down? We saw this recently with Facebook. They dialed down the promotion. So you almost see Facebook trying to have its cake and eat it too, which personally, I don't think that's the right approach. I think Facebook either has to say damn the torpedoes. It's open content, we're going to promote it. Or do the right thing and take those videos down, those fake news videos. It can't have it both ways. So Facebook seems to be somewhat conflicted. They are probably under the most scrutiny now, as well as Google, who's being accused, anyway, certainly we've seen this in the EU, of promoting its own ads over its competitors' ads. So people are going to be watching that. And, of course, Amazon just having too much power. Having too much power is not necessarily an indication of abusing monopoly power, but you know the government is watching. So that bears watching. theCUBE is going to be covering that. We'll be here all day, covering the IBM CDO event. I'm Dave Vallente, you're watching theCUBE. #IBMCDO, DM us or Tweet us @theCUBE. I'm @Dvallente, keep it right there. We'll be right back right after this short break. (upbeat music)