from around the globe it's thecube with coverage of kubecon and cloudnativecon north america 2020 virtual brought to you by red hat the cloud native computing foundation and ecosystem partners hello and welcome back to the cube's coverage of kubecon plus cloud nativecon 2020 the virtual edition abinav joshi is here he's the senior product marketing manager for openshift at red hat and tom dean is the senior director of pro product management at cloudera gentlemen thanks for coming on thecube good to see you thank you very much for having us here hey guys i know you would be here it was great to have you and guys i know you're excited about the partnership and i definitely want to get in and talk about that but before we do i wonder if we could just set the tone you know what are you seeing in the market tom let's let's start with you i had a great deep dive a couple of weeks back with anupam singh and he brought me up to speed on what's new with cloudera but but one of the things we discussed was the accelerated importance of data putting data at the core of your digital business tom what are you seeing in the marketplace right now yeah absolutely so um overall we're still seeing a growing demand for uh storing and and processing massive massive amounts of data even in the past few months um where perhaps we see a little bit more variety is on by industry sector is on the propensity to adopt some of the latest and greatest uh technologies that are out there or that we we deliver to the market um so whether perhaps in the retail hospitality sector you may see a little bit more risk aversion around some of the latest tools then you you go to the healthcare industry as an example and you see we see a strong demand for our latest technologies uh with with everything that is that is going on um so overall um still a lot lots of demand around this space so abnormal i mean we just saw in ibm's earnings though the momentum of red hat you know growing in the mid teens and the explosion that we're seeing around containers and and obviously openshift is at the heart of that how the last nine months affected your customers priorities and what are you seeing yeah we've been a lot more busier like in the last few months because there's like a lot of use cases and if you look at the like a lot of the research and so on and we are seeing that from our customers as well that now the customers are actually speeding up the digital transformation right people say that okay kovac 19 has actually uh speeded up the digital transformation for a lot of our customers for the right reasons to be able to help the customers and so on so we are seeing a lot of attraction on like number of verticals and number of use cases beyond the traditional lab dev data analytics aiml messaging streaming edge and so on like lots of use cases in like a lot of different like industry verticals so there's a lot of momentum going on on openshift and the broader that portfolio as well yeah it's ironic the the timing of the pandemic but it sure underscores that this next 10 years is going to be a lot different than the last 10 years okay let's talk about some of the things that are new around data tom cloudera you guys have made a number of moves since acquiring hortonworks a little over two years ago what's new with uh with the cloudera data platform cdp sure so yes our latest therap uh platform is called cbp clara data platform last year we announced the public cloud version of cdp running on aws and then azure and what's new is just two months ago we announced the release of the version of this platform targeted at the data center and that's called cvp private cloud and really the focus of this platform this new version has been around solving some of the pain points that we see around agility or time to value and the ease of use of the platform and to give you some specific examples with our previous technology it could take a customer three months to provision a data warehouse if you include everything from obtaining the infrastructure to provisioning the warehouse loading the data setting security policies uh and fine-tuning the the software now with cbp private cloud we've been able to take those uh three months and turn it into three minutes so significant uh speed up in in that onboarding time and in time to valley and a key piece of this uh that enabled this this speed up was a revamping of the entire stack specifically the infrastructure and service services management layer and this is where the containerization of the platform comes in specifically kubernetes and red hat open shift that is a key piece of the puzzle that enables this uh order of magnitude uh improvement in time right uh now abner you think about uh red hat you think about cloudera of course hortonworks the stalwarts of of of open source you got kind of like birds of a feather how are red hat and cloudera partnering with each other you know what are the critical aspects of that relationship that people should be aware of yeah absolutely that's a very good question yeah so on the openshift side we've had a lot of momentum in the market and we have well over 2000 customers in terms of a lot of different verticals and the use cases that i talked about at the beginning of our conversation in terms of traditional and cloud native app dev databases data analytics like ai messaging and so on right and the value that you have with openshift and the containers kubernetes and devops like part of the solution being able to provide the agility flexibility scalability the cross cloud consistency like so all that that you see in a typical app dev world is directly applicable to fast track the data analytics and the ai projects as well and we've seen like a lot of customers and some of the ones that we can talk about in a public way like iix rbc bank hca healthcare boston children's bmw exxon mobil so all these organizations are being are able to leverage openshift to kind of speed up the ai projects and and help with the needs of the data engineers data scientists and uh and the app dev folks now from our perspective providing the best in class uh you say like experience for the customers at the platform level is key and we have to make sure that the tooling that the customers run on top of it uh gets the best in class the experience in terms of the day zero to day two uh management right and it's uh and and it's an ecosystem play for us and and and that's the way cloudera is the top isv in the space right when it comes to data analytics and ai and that was our key motivation to partner with cloudera in terms of bringing this joint solution to market and making sure that our customers are successful so the partnership is at all the different levels in the organization say both up and down as well as in the the engineering level the product management level the marketing level the sales level and at the support and services level as well so that way if you look at the customer journey in terms of selecting a solution uh putting it in place and then getting the value out of it so the partnership it actually spans across the entire spectrum yeah and tom you know i wonder if you could add anything there i mean it's not just about the public cloud with containers you're seeing obviously the acceleration of of cloud native principles on-prem in a hybrid you know across clouds it's sort of the linchpin containers really and kubernetes specifically linchpin to enable that what would you add to that discussion yeah as part of the partnership when we were looking for a vendor who could provide us that kubernetes layer we looked at our customer base and if you think about who clara is focused on we really go after that global the global 2000 firms out there these customers have very strict uh security requirements and they're often in these highly regulated uh industries and so when we looked at a customer's base uh we saw a lot of overlap and there was a natural good fit for us there but beyond that just our own technical evaluation of the solutions and also talking to uh to our own customers about who they do they see as a trusted platform that can provide enterprise grade uh features on on a kubernetes layer red hat had a clear leadership in in that front and that combined with our own uh long-standing relationship with our parent company ibm uh it made this partnership a natural good thing for us right and cloudera's always had a good relationship with ibm tom i want to stay with you if i can for a minute and talk about the specific joint solutions that you're providing with with red hat what are you guys bringing to customers in in terms of those solutions what's the business impact where's the value absolutely so the solution is called cbd or color data platform private cloud on red hat openshift and i'll describe three uh the three pillars that make up cbp uh first what we have is the five data analytic experiences and that is meant to cover the end to end data lifecycle in the first release we just came out two months ago we announced the availability of two of those five experiences we have data warehousing for bi analytics as well as machine learning and ai where we offer a collaborative data science data science tools for data scientists to come together do exploratory data analytics but also develop predictive models and push them to production going forward we'll be adding the remaining three uh experiences they include data engineering or transformations on uh on your data uh data flow for streaming analytics and ingest uh as well as operational database for uh real-time surveying of both structure and unstructured data so these five experiences have been re-banked right compared to our prior platform to target these specific use cases and simplify uh these data disciplines the second pillar that i'll talk about is the sdx or uh what what we call the shared data experience and what this is is the ability for these five experiences to have one global data set that they can all access with shared metadata security including fine grain permissions and a suite of governance tools that provide lineage provide auditing and business metadata so by having these shared data experiences our developers our users can build these multi-disciplinary workflows in a very straightforward way without having to create all this custom code and i can stitch you can stitch them together and the last pillar that i'll mention uh is the containerization of of the platform and because of containers because of kubernetes we're now able to offer that next level of agility isolation uh and infrastructure efficiency on the platform so give you a little bit more specific examples on the agility i mentioned going from three months to three minutes in terms of the speed up with i uh with uh containers we can now also give our users the ability to bring their own versions of their libraries and engines without colliding with another user who's sharing the platform that has been a big ask from our customers and last i'll mention infrastructure efficiency by re-architecting our services to running a microservices architecture we can now impact those servers in a much more efficient way we can also auto scale auto suspend bring all this as you mentioned bring all these cloud native concepts on premises and the end result of that is better infrastructure efficiency now our customers can do more with the same amount of hard work which overall uh reduces their their total spend on the solution so that's what we call cbp private cloud great thanks for that i mean wow we've seen really the evolution from the the wild west days of you know the early days of so-called big data ungoverned a lot of shadow data science uh maybe maybe not as efficient as as we'd like and but certainly today taking advantage of some of those capabilities dealing with the noisy neighbor problem enough i wonder if you could comment another question that i have is you know one of the things that jim whitehurst talked about when ibm acquired red hat was the scale that ibm could bring and what i always looked at in that context was ibm's deep expertise in vertical industries so i wonder what are some of the key industry verticals that you guys are targeting and succeeding in i mean yes there's the pandemic has some effects we talked about hospitality obviously airlines have to have to be careful and conserving cash but what are some of the interesting uh tailwinds that you're seeing by industry and some of the the more interesting and popular use cases yeah that's a very good question now in terms of the industry vertical so we are seeing the traction in like a number of verticals right and the top ones being the financial services like healthcare telco the automotive industry as well as the federal government are some of the key ones right and at the end of the day what what all the customers are looking at doing is be able to improve the experience of their customers with the digital services that they roll out right as part of the pandemic and so on as well and then being able to gain competitive edge right if you can have the services in your platform and make them kind of fresh and relevant and be able to update them on a regular basis that's kind of that's your differentiator these days right and then the next one is yeah if you do all this so you should be able to increase your revenue be able to save cost as well that's kind of a key one that you mentioned right that that a lot of the industries like the hospitality the airlines and so on are kind of working on saving cash right so if you can help them save the cost that's kind of key and then the last one is is being able to automate the business processes right because there's not like a lot of the manual processes so yeah if you can add in like a lot of automation that's all uh good for your business and then now if you look at the individual use cases in these different industry verticals what we're seeing that the use cases cannot vary from the industry to industry like if you look at the financial services the use cases like fraud detection being able to do the risk analysis and compliance being able to improve the customer support and so on are some of the key use cases the cyber security is coming up a lot as well because uh yeah nobody wants to be hacked and so and and so on yeah especially like in these times right and then moving on to healthcare and the life sciences right what we're seeing the use cases on being able to do the data-driven diagnostics and care and being able to do the discovery of drugs being able to say track kobit 19 and be able to tell that okay uh which of my like hospital is going to be full when and what kind of ppe am i going to need at my uh the the sites and so on so that way i can yeah and mobilize like as needed are some of the key ones that we are seeing on the healthcare side uh and then in terms of the automotive industry right that's where being able to speed up the autonomous driving initiatives uh being able to do uh the auto warranty pricing based on the history of the drivers and so on and then being able to save on the insurance cost is a big one that we are seeing as well for the insurance industries and then but more like manufacturing right being able to do the quality assurance uh at the shop floor being able to do the predictive maintenance on machinery and also be able to do the robotics process automation so like lots of use cases that customers are prioritizing but it's very verticalized it kind of varies from the vertical to a vertical but at the end of the day yeah it's all about like improving the customer experience the revenue saving cost and and being able to automate the business processes yeah that's great thank you for that i mean we we heard a lot about automation we were covering ansible fest i mean just think about fraud how much you know fraud detection has changed in the last 10 years it used to be you know so slow you'd have to go go through your financial statements to find fraud and now it's instantaneous cyber security is critical because the adversaries are very capable healthcare is a space where you know it's ripe for change and now of course with the pandemic things are changing very rapidly automotive another one an industry that really hasn't hadn't seen much disruption and now you're seeing with a number of things autonomous vehicles and you know basically software on wheels and insurance great example even manufacturing you're seeing you know a real sea change there so thank you for that description you know very often in the cube we like to look at joint engineering solutions that's a gauge of the substance of a partnership you know sometimes you see these barney deals you know there's a press release i love you you love me okay see you but but so i wonder if you guys could talk about specific engineering that you're doing tom maybe you could start sure yeah so on the on the engineering and product side um we've um for cbp private cloud we've we've changed our uh internal development and testing to run all on uh openshift uh internally uh and as part of that we we have a direct line to red hat engineering to help us solve any issues that that uh we run into so in the initial release we start with support of openshift43 we're just wrapping up uh testing of and we'll begin with openshift46 very soon on another aspect of their partnership is on being able to update our images to account for any security vulnerabilities that are coming up so with the guidance and help from red hat we've been we've standardized our docker images on ubi or the universal based image and that allows us to automatically get many of these security fixes uh into our into our software um the last point that i mentioned here is that it's not just about providing kubernetes uh red hat helps us with the end to end uh solution so there is also the for example bringing a docker registry into the picture or providing a secure vault for storing uh all the secrets so all these uh all these pieces combined make up the uh a strong complete solution actually the last thing i'll mention is is a support aspect which is critical to our customers in this model our customers can bring support tickets to cluberra but as soon as we determine that it may be an issue that uh related to red hat or openshift where we can use their help we have that direct line of communication uh and automated systems in the back end to resolve those support tickets uh quickly for our customers so those are some of the examples of what we're doing on the technical side great thank you uh enough we're out of time but i wonder if we could just close here i mean when we look at our survey data with our data partner etr we see containers container orchestration container management generally and again kubernetes specifically is the the number one area of investment for companies that has the most momentum in terms of where they're putting their efforts it's it's it's right up there and even ahead of ai and machine learning and even ahead of cloud which is obviously larger maybe more mature but i wonder if you can add anything and bring us home with this segment yeah absolutely and i think uh so uh one thing i want to add is like in terms of the engineering level right we also have like between cloudera and red hat the partnership and the sales and the go to market levels as well because once you build the uh the integration it yeah it has to be built out in the customer environments as well right so that's where we have the alignment um at the marketing level as well as the sales level so that way we can like jointly go in and do the customer workshops and make sure the solutions are getting deployed the right way right uh and also we have a partnership at the professional services level as well right where um the experts from both the orgs are kind of hand in hand to help the customers right and then at the end of the day if you need help with support and that's what tom talked about that we have the experts on the support side as well yeah and then so to wrap things up right uh so all the industry research and the customer conversation that we are having are kind of indicating that the organizations are actually increasing the focus on digital uh transformation with the data and ai being a key part of it and that's where this strategic partnership between cloudera and and red hat is going to play a big role to help our mutual customers uh through that our transition and be able to achieve the key goals that they set for their business great well guys thanks so much for taking us through the partnership and the integration work that you guys are doing with customers a great discussion really appreciate your time yeah thanks a lot dave really appreciate it really enjoyed the conversation all right keep it right there everybody you're watching thecube's coverage of cubecon plus cloud nativecon north america the virtual edition keep it right there we'll be right back

from the cube studios in palo alto in boston connecting with thought leaders all around the world this is a cube conversation hi everybody this is dave vellante thecube and we have some news for you pure storage has acquired portworx the kubernetes specialist for 370 million dollars in an all-cash transaction charlie giancarlo is here he's the ceo of pure storage and he's joined by merlin theorem alley who is the ceo of portworx gentlemen good to see you thanks for coming on thank you dave thanks for having us so charlie uh the transaction all cash transaction north of 300 million your biggest transaction uh ever your biggest acquisition uh give us give us the hard news yeah well the the hard news is uh easy news for our customers we're bringing together uh two great companies uh pure as you know the the leader in technology and uh data storage and management and we're bringing together in uh to our team uh the port works team that is the has been the leader uh in container orchestrated uh storage systems and uh it really is gonna match uh you know the existing and and uh legacy uh hardware and application environment to the new environment of containers and we couldn't be more excited so to so tell us you know what was the rationale the sort of thesis behind the acquisition what are you hoping to accomplish charlie yeah you know uh containers is the way that uh applications are going to be developed in the future uh with with no doubt and uh containers utilize storage differently than traditional application environments whether those are rvms or even bare metal application environments and uh because of that it's a very new way of of handling data management the other thing we saw was a philosophy within um portworx very similar to pure of building cloud everywhere and make it look the same whether it's in a private data center or in the uh public uh cloud environment and so by bringing these two things together we create a very consistent environment for uh for customers whether they're utilizing and going with their existing application environment or with the new container environment for their new applications so merlin let me go to you first of all congratulations you know this isn't your your your first uh nice exit we we've known each other for a long time so so that's fantastic for you and the team uh so so bring us up to date on kind of where the company you know started and and where it's gone and and why you feel like this is such a good fit and a good exit for portworx well let's start with the company you know we've been uh at this for uh five and a half years almost six now and we started with these the very premise that that as containers were beginning to be deployed and apps started to kind of be seen everywhere containerized that data agility needed to match the app agility that people were getting from containers and that was something that was missing and so one of the things we did was really kind of take an entirely different approach to storage we turned kind of storage on its head and and designed it from the app down and effectively what we did was leverage kubernetes which was being used really until then to orchestrate really just the container part of the of this system to start orchestrating data and storage as well so northbound you know we containers are being orchestrated or orchestrated by kubernetes to manage the apps and southbound portworx now added the ability to manage data with kubernetes and what that's resulted in dave is that you know uh in in the last several years we've gained 160 customers uh household names right comcast t-mobile lufthansa ge roblox uh rbc who have all sort of deployed us in production and and really kind of built a leadership position in the ability to aid digital transformation uh of you know which customers are going through with containers hey guys i wonder if you could bring up that the chart uh i want to just introduce some etr data here so so this is one of our favorite views x y view the vertical axis is spending momentum when what we call net score higher the better and the vert and the horizontal axis is is market share and you can see i've outlined with that little pink area container orchestration and container platforms and you can see it's very elevated right there with machine learning and ai a little bit above cloud computing right there with robotic process automation this is the april survey of 1200 uh respondents uh the july survey you know robotic process automation bumps up a little bit which changes the shape but i wanted to show this picture to really explain to our audience the you know the popularity and this is where people are investing and charlie you can see storage kind of you know right there in the in the middle and you it seems to me you're now connecting the dots to containers which are gonna disperse everywhere we often think of containers sometimes as a separate thing but it's not i mean it's embedded into the entire stack i wonder if you can talk containers are just the next generation way of of building applications right and one of the great things about uh containers when you build an app on containers it becomes what's known as portable you know it can operate in the cloud it can operate on your own hardware inside your own data center and of course pure is known for making data portable as well between both private data centers and hyperscalers such as aws and uh and azure so by bringing this together making it possible not just for as we talked about container based applications but also for existing uh application environments whether those are vm or bare metal you know we create a very flexible portable environment i wonder if we could talk merely about you know just sort of the evolution of i mean vms and then and obviously containers the you know the virtual machines when we were spinning them up in the early days storage was like the second class citizen and then through a series of integrations and you know hard work you had you know storage much more native but every vm is is is kind of fat right it's sharing the same uh or has its own operating system my understanding is containers they could share a single operating system uh and and so but talk a little bit more first of all is that right and where does storage fit in in containers i mean we think of them at least at least in the early days as ephemeral uh but you're solving a different problem of persistence maybe talk about that that problem that you're solving sure dave i think you know you characterize this as uh the right way right there's kind of vms uh that have dominated sort of in in the world of infrastructure for for for the last 10 15 years now but what what is really happening here is a little bit more profound right really is if you think about it this is the transformation of a data center from being very very machine centric which is sort of the look back view of the world to being much more application centered going forward and this is being accomplished not just by you know what charlie talked about which is applications being deployed in containers but by the evolution of using kubernetes now as the new control plane for the data center so in in the last couple of years something amazing has happened right people have adopted containers and in doing so they've realized they need to orchestrate these containers and lo and behold they've kind of deployed kubernetes as they've done that they've begun to recognize that kubernetes now gives them a an amazing capability they can now let everything be application driven so kubernetes is now the new app defined control plane for the for the data center just like vms and vmware was the you know the kind of compute centered machine defined data center of the past so we're one of those modern day companies for the modern you know digital transformation stack and it doesn't just mean it's just not just products like portworx but other products in there right whether it's a rancher an open shift or or security solutions that are extensions of kubernetes so to your point what we've done is we've taken kubernetes and extended it to managing storage and data and we're doing that in a way that allows it to be fully distributed completely automated and in fact what happens is now the management of of the app and the data go hand in hand at the same time you don't have these separation of sort of responsibilities so the person who is really our buyer and buying set is a very different buyer than traditional storage and you know you know traditional storage i've talked to you about that part of the business a long time many times in the in the past our buyers are actually devops buyers so we land in devops and we expand in it ops our budgets are coming from uh a digital transformation budget like move to cloud or or even just kind of business transformation and our users are really not the classic storage user but really the the person who's driving kubernetes the person who's making automation decisions cloud architects automation architects they can now operate storage without having to know storage through products like portworx that extend kubernetes uh and and and allow it to be all application driven okay so it's much more happen so it's much more than just bringing i'd say jess much more than bringing state uh to what was originally a stateless environment it's bringing more data management uh correct so charlie connect the dots for us in terms of where pure fits in that in that value chain well as you know i mean we've developed a large number of products and capabilities that uh go well beyond storage into data management so whether it's snapshotting or replication or data motion you know into uh you know from uh from on-prem into the cloud and as we've been doing that we've been building up a control plane to do this with you know traditional uh block and file storage now this is extending that set of same set of capabilities uh to the container side uh you know whether it'll be block because contain there are a lot of container systems that are looking at block but even into the object space overall so think of this as the integration of data manage of a data management control plane for both existing and new apps and and that data control plane existing not just in one location such as uh the the private data center or the private cloud but also into the public uh cloud as well so that a company can orchestrate their both their uh their container-based apps but also the data that goes along with them and the data that goes to their traditional apps with one orchestration tool so you know you mentioned you know i think when you said motion i think of vmotion uh and and if i want to move a workload from one vm to another i can preserve at state is that kind of where you're headed with with control you're thinking of it very much in a push you know i t push sense rather than just the application calling for data access and being given given it through a set of apis so again very much more dynamic environment rather than rather than it be a human uh instigated you know think of it being as as a policy and and pro and programmer initiated set of activities uh i'm glad you brought that up because i think about we think about you know we also often think in monolithic terms and and containers are not right it's really like you said we can have applications even though they run inside of vms it sort of breaks they can but they don't have to right they can run on bare metal uh but of course you know with the with vmware they they've designed it to be able to run inside of vms as well if that's what customers are most comfortable with sure ultimately you were going to add some color to that yeah i think i think you know what what what charlie is describing is really kind of a new paradigm that's a self-service paradigm where application owners and application drivers people who are creating apps deploying apps now can can self-service themselves through a kubernetes-based interface and and it's all automated right so in in a in a funny way one way to think about this is a somebody who who's you know deploying apps they are doing that with the help of kubernetes their hands never leave the kubernetes wheel and now all of a sudden they're deploying you know data and storage and doing all of that without an intimate knowledge of the storage infrastructure so that kind of idea of automation driving and it's and this app-driven self-service model really enables that agility for data in addition to the agility for uh for the app layer and and i think dave the key thing here is you know why why it why has that container bubble floated to the top of of your of your of the graph that you just showed it's because i think modern day enterprises are doing two things that are imperative for their success right one of them is the fast enterprises are gonna eat the slow so they need to move fast and the way for that fast to be translated from an app agility to the agility throughout the whole stack is enabled by this the other thing that they are doing is data is the new oil and and folks really need to be able to leverage their data whether it's their own data external data but bring it all together in real time mine it and they can't do that without automating the heck out of it right and that's what kubernetes enables also so the combination of data agility and being able to kind of create that ability to mine in real time the data through an app-oriented interface is is completely revolutionary if you think about it and in my view going forward what you're going to start seeing is that kubernetes is going to start revolutionizing not just the app world but the world of infrastructure the world of infrastructure is going to change significantly with the advent of kubernetes being used to manage infrastructure yeah we often say in the cube the data is the new development kit and and you're talking about you know infrastructure as code is the perfect instantiation here so charlie i i wonder if are developers sort of a new distribution channel for you do you see that involving yeah you know we did a lot of studying uh before bringing the two companies together and about 40 percent of the buyers of uh of uh this uh environment of of port works our customers that we do talk to regularly in the it group and about 60 in the devops environment so you know one of the beautiful things about this is we have a good head start with the people we're selling to today but also it opens up a whole new uh buying area for us with devops and one that we plan on uh investing in as we go forward so charlie i would imagine this is a pretty fast close right uh what's the yeah these are two california companies and and luckily we've we we scoot under the uh uh the uh uh legal radar of hsr so we think we'll be able to close this within 30 days great and and how will you organize it you're going to where it's going to be it's going to be a a new business unit uh reporting directly to me uh as especially as we go through the you know the early days of of integrating but really we want to learn from the way that poor works has built a successful business make sure that we combine the best of both organizations together uh and uh really understand uh you know how to best uh tie together our go-to markets uh in the uh you know with uh the combination of of legacy and container and so so emerald are you gonna hang out for a while absolutely i you know uh i was i was talking to my team earlier and i said look the journey of business success is like a thousand steps and the part of a startup is only the first 250 steps i'll tell you i think we've kind of run up those first 250 steps pretty fast but we're going to sprint through the next 750 steps with with uh you know in the company of of pure because look pure is has always been well known as a disrupter in the business uh for a long time and we are a relatively new disruptor in the kubernetes space i think this is this this level of our joint ability to disrupt that market end to end is gonna be just just uh astounding astonishing i i'm just really looking forward to kind of taking this to a greater level of accelerating our our business well charlie i mean you see in the data i mean if you pick a analyst firm the vast majority of new applications are being you know developed in using kubernetes and containers but uh give us the last word uh give us the the summary from you in your final thoughts you know i think you know for uh both pure and port work customers what they're going to see is just a great marriage of two great companies i think it's a marriage of two great technologies and they're going to see the ability to be able to orchestrate all of their data across you know their existing as well as their new application environments and across both their development of their private cloud and the public cloud environment so this is uh you know a great addition to uh the advancement that customers are seeing through orchestration orchestration both of their application environment but just as importantly the orchestration of their data storage and management excellent well gentlemen thanks so much for your time really appreciate you coming on thecube thank you david thank you all right and best of luck to you both and thank you for watching everybody this is dave vellante for the cube and we'll see you next time you

>>Well, thank you, everyone. And welcome to winning the roadmap race. How? Toe work with tech vendors to get the features that you need. We're here today with representatives or RBC Capital Markets. We will share some of their best practices for collaborating with technology vendors. I am Ada Mancini, solution architect here at Mirant us. And we're joined by Tina Bustamante, senior production manager, RBC Capital Markets and Minnows Agarwal, head of capital markets. Compute and data fabric. Um, RBC has been using docker since about 2016 and you've been closely involved with that effort. What moved you to begin, contain arising applications. >>Okay, uh, higher that. Thank you for having us. Um, back in 2016 when we started our journey one off our major focus, Syria was measuring develops capabilities And what we, uh what we found was it was challenging. Toe adopt develops across applications with different shapes and sizes, different text tax. And as the financial industry, we do have, um, a large presence of rental applications. So making it making that work was challenging. This is where containers were appealing. Tow us. In those early days, we started looking at containers as a possible solution to create a standardization across across different applications to have a consistent format. Other than that, we also saw containers as a potential technology that could be adopted across across enterprise, not just a small subset of applications. Uh, so that that was very interesting. Interesting. Tow us. In addition to that, uh, containers came with schedulers like kubernetes or swarm, which were, uh, which we're doing a lot more than all, which would do a lot more than the traditional traditional schedulers. As an example, resource management fell over management or scaling up and down, depending on a application or business requirements. So all those things were very appealing. It looked like a solutions to a number of problems that are number of challenges that we're facing. So that's when we got started with containers. >>So what subsequently motivated you to start utilizing swarm and then kubernetes? >>Yeah, other than resource management, the follower Management Aziz, you can imagine managing followers. D are Those are never difficult, Never easy on with containers. We saw that, as the container schedule is, we saw that it's a kind of becomes a manage manage service for us. Um, other aspect We are heavily regulated industry in capital markets, especially so creating an audit trail off events. Who did what? When? Uh, that's important. And containers seem to provide all those all those aspects tow us out of the box. Um, the another thing that we saw with containers under the schedulers, we could simplify our risk management. We could control what, what application on which container gets deployed, where, how they run on when they run. So all all those aspects of schedule er they simplify are seen to simplify at that time a lot off a lot off the traditional challenges, and that that's what was very appealing to us. >>Eso what kind of changes were required in the development culture and in operations in order to enable these new this new platform in this new delivery method? >>Yeah, that that's a good question, and any change obviously requires a lot of education. And this was not just a change across our developers or operations, but it was the change across throughout the change, starting with project managers, business analyst developers, Q A, uh, Cuba and our support personal. In addition, I talked about the risk and security Management so it it is. It is a change across the organization. It's, uh it's a cultural change. So the collaboration other than education collaboration was extremely, extremely important. So across those two, we started first with internal education, using something like internal lunch and learns. We did some external workshops or some hands on workshops. So a lot of those exercises were done in collaboration across all those all those things. The next item that we focused on is how do we get our high end developers the awareness of this technology on, uh, make sure they can. They can see, uh, the use cases. Or they can identify the use cases that can benefit from this technology. So we picked high end developers, noticed application and kind of try before you buy type of scenarios. So we ran through some applications to make sure they get their hands study. They feel comfortable with it on. Then they can broadcast that message. The broader organization, the next thing we did it waas getting the management buying. So obviously any change is going to require investment on uh, making sure there's a value proposition that's clear to our management as well as our business was critical very early on in in container option face. So that that that was that was another item that we focused heavily on. And the last thing I would say is a clearly defining strategy benefits so defining a roadmap off how we will proceed, How do we go from our low risk to high risk application or low risk medium risk applications? And what other strategy benefits are these purely operational? Are these purely cause best benefit? Or it's a modernization of the underlying technical facts. So if the containers do check all those three boxes So that that was that was our fourth item on the left that, uh, that, I would say, changed, um, in a container adoption journey. >>So as as people are getting onto the container ization process and as this is starting to gain traction, what things did your developers embrace as the real tangible benefits, um, of moving the containers of container platforms? >>It's interesting. The benefits are not just for developers. And the way I will answer this question is not from development operations. But let me answer it from the operations to developers. So operationally the moment developers saw that application can be deployed with containers relatively quickly without without having them on the collar without them writing a long release notes. They started seeing that benefit right away, but I don't need to be there late in the evening. I don't need to be there on call to create the environment or deploying, uh, deploying Q A versus production versus the are to them because, like do it right one on then repeat that success factor of different environments. So that was that. That was a big eye opening, um, eye opening for them. And they started realizing that Say, Look, I can free up my time now I can focus. I can focus on my core development, and I don't need to deal with the traditional traditional operational operational issues. So that's what that what? That was quite eye opening for all of us, not just for developers. And we started seeing those, uh, that are very early on. Another thing, I would say the developers talked about waas. Hey, I can validate this application on my laptop. I don't need to be I don't need to be on, uh, on on servers. I don't need all these servers. I don't need to share my service. I don't need to depend on infrastructure teams or other teams to get their check is done. Before I kept start my work, I can validate on my on my laptop. That was that was another very powerful feature. Um, that that empowered them. The last thing I would say is that the software defined aspect, uh, aspect off, um, off technology as an example, Network or storage. Although a lot of these traditional things that something Democrats have to call someone they have to wait on, then they have to deal with tickets. Now, they can do a lot of these things themselves. They can define it themselves, and that's very empowering. So they are perspective. Our move towards left, Um, s o the more control developers have, the better the product is. The better the quality of the product. The time to market improves on just the overall experience on the business benefits. They also start to They all start toe, um improved last part. One extra point. I would like to make here the success success of this waas so interesting, uh, to the development community even our developers from business. They they came along and they have shown interest in adopting containers. Whether it's, uh, the development developers from the quartz are the data science developers. They all started realizing the value value proposition of containers. So it was It was quite eye opening, I would have to say. >>And so while this while this process is happening while you're moving to container platforms, um, you started looking for new ways to try and deliver some of the benefits of containers and distributed systems orchestration more widely across the organization. And I think you identified a couple areas where, um, the doctor Enterprise kubernetes service wasn't meeting the features that you anticipated or it hadn't planned on integrating the features that you required. Um, can you tell us about that situation? >>Certainly. Haida. Thanks for having us again. Um, from the product management perspective, I would say products are always evolving and the capabilities can We have different stages of maturity. So when we reviewed what our application teams what are businesses looking to dio? One area that stood out was definitely the state of science space. Um, are quantum data science is really wanted to expand our risk analysis models. Um, they were looking for larger scales, uh, to compute like a lot more computing power. And we tried to see, um, come up with a way to be ableto facilitate their needs. Um, one thing, and it really, really came from like an early concept was the idea of being able to leverage GPU. Um, we stood up like a small R and D team, trying to see if there was something that would be feasible for our on our end. Um, but based on different factors and considerations and, you know, technical thinking involved in this we just realized that the complexity that it would bring to our you know, our overall technical back is not something, um that we would be, um, best suitable, I would say to do it on our own. So we reached out Thio Tim Aransas and brought forth, like, the concept of being able to scale the kubernetes pods on GPS. We relied on there authorities on their engineers Thio, you know, think about being able to expand, uh, kubernetes there kubernetes offering to be able to scale and potentially support running the pods and GPS um, definitely was not something that came from one day to the next that it did involve a number of conversations. Um, but, you know, I'm happy to say I was saying the recent months it has become part of the KUBERNETES product offering. >>Yeah, I believe that that effort, um, did take ah, while took a ah lot of engineering effort. Um, and I think initially all had done some internal r and D to try to work on those features, but ultimately, you decided to go with a different strategy and rely on the vendor to produce those assed part of the vendors product. Um, can you elaborate on the things that you found in that internal R and D? >>Well, we definitely saw the potential for there was definitely potential there. But, you know, the longevity of actually maintaining that GPU, uh, scaling using communities on our own was just not 100% like, in our expertise, expertise of something that we wanted to collaborate more closely with the vendor. Um, you know, technology is always evolving, So it's just the longevity of keeping up with, like, the the up to date features or capabilities testing que involved was just not something that we thought it would be. Something that we should be taking on on our own. >>Okay, So, like spending the time and engineering effort, focusing on the data science, the quantity of analysis parts I see. Um, and then ultimately, um, working with the vendor produced a release and where these features are now available. Um, how what did that engagement look like? Um, with RBC s involvement, >>I would say the engagement started off with, you know, discussing bringing it forth, being very open, you know, having transparency. So that delivery was always a little bit was the focus. Um, but it definitely, um, started office, you know, discussing what it would be like the business case. Why we would require the feature. Definitely the representative. Those and others engaged from them. A ransom side had their own, Um, you know, thoughts and opinions. Um, it had to be being able to run the work clothes, um, on GPU would be something that they would ultimately, as I mentioned, have to support on their end. Um, so we did work with them very closely. There was a very much a willingness collaborate we held a number of meetings. We discuss how the CPU support would would actually evolved. So it wasn't something that came about within like one sprint. No, that was never like our expectation. It did take a couple weeks to be able to see, like a beta product opine on it, see a demo, review it, discuss it further. Um, as you know, sometimes there might be a relief where this capability maybe offered, but there are delays. It's just, you know, part of off of our industry in a cent. Um, we're very much risk versus the nose mentioned, you know, >>when >>you are a financial institution. So we just wanted to make sure it was a viable product, that it was definitely available off the shelf, and then we would be able to leverage it. Um, but yeah, the key point, I would say, in terms of being able to bring the feature forward with definitely constant communication with Miranda, >>that's excellent. I'm glad that were ableto help bring that feature forward. I think that it's something that a lot of people have been asking for and like you said, it enables ah, whole new class of uh, problem solving. Okay. Uh, Meno je Tina, Thank you for your time today. It's been wonderful talking to you again. Uh, that is our session on working with your vendors. I want to thank everyone who's watching this for taking the time Thio contribute to our conference. Uh, awesome. Thank you, kitty.

>>From the cube studios in Palo Alto in Boston. It's the cube covering the IBM thing brought to you by IBM. Everybody we're back. This is Dave Vellante the cube, and this is our wall-to-wall coverage, IBM's digital thing experienced for 2020. We're really excited to have Jerry Cuomo on. He's the, uh, vice president of blockchain technologies and an IBM fellow and longtime cube alum. Jerry, good to see you again. Thanks for coming on and wish we were face to face, but yeah, this'll do. Good to see you too. Yes, thanks for having me. So we've been talking a lot of and talking to, I've been running a CEO series a, of course, a lot of the interviews around, uh, IBM think are focused on, on COBIT 19. But I wonder if you could start off by just talking a little bit about, you know, blockchain, why blockchain, why now, especially in the context of this pandemic. >>David's, it's as if we've been working out in the gym, but not knowing why we needed to be fixed. And I know now why we need to be fit. You know, blockchain is coming just in time. Mmm. You know, with the trust factor and the preserving privacy factor. Okay. The way we move forward the world is now becoming more digital than ever people working from home. Um, the reliance and online services is, that's critical. our ability to work as a community accompanies companies. The shared data is critical. you know, blockchain brings a magical ingredient and that's the ingredient of trust, you know, in sharing data. Okay. When, if that data and the sources that are providing that data arc okay. From verified and trusted, we're more likely to use that data and you the, any friction that's caused for fear of trepidation that the data is going to be misused. >>Mmm. It goes start to go away. And when that happens, you speed up an exchange and we need speed. Time is of the essence. So blockchain brings a platform for trusted data exchange while preserving privacy. And that provides a foundation. I can do some amazing things in this time of crisis, right? Yeah. And it's, it's not only trust, it's also expediency and you know, cutting out a lot of the red tape. And I want to talk about some of the applications. You're heavily involved in that in the distributed ledger, a project, you know, one of the early leads on that. Um, talk about some of the ways in which you're flying that distributed a ledger. And let's go into some of the examples. So we're, we're really fortunate to be an early adopter blockchain and, and provider of blockchain technology and kind of the fruit of that. >>Um, as I said, it couldn't happen any sooner where we have, Mmm, I would say over a thousand, alright. Users using IBM blockchain, which is powered by the opensource Hyperledger fabric, I'd say over a hundred of those users, um, have reached a level of production networks. you know, it's been great to see some of the proprietors of those networks now repurpose the networks towards hastening the relief of, uh, and one, a couple of examples that stand out, Dave. Mmm. You've seen what's happening to our supply chain. And then I think we got some rebound happening as we speak, but companies all of a sudden woke up one morning and their supply chains were, I'm exhausted. So suppliers, we're out of key goods and the buyers needed very rapidly to expand. They're, the supplier is in their, in their supply chain. there are laws and regulations about what it takes to onboard a new supplier. >>You want to make sure you're not onboarding bad actors. So in IBM for example, we have over 20,000 suppliers to our business and it takes 30 to 40 days who, uh, validate and verify one of those suppliers. We don't have 30 to 45 days, you know, think about you're a healthcare company or a food company. So working with a partner called Jane yard, uh, co-created a network called trust yourself buyer. And we've been able to repurpose, trust your supplier now or companies that are looking, you know, around Kobe 19 to rapidly okay, expand, you know, their, their supply chain. So if you imagine that taking us 45 days or 40 days to onboard a new supplier, okay. Pick, pick a company in our supply chain, Lenovo, that supplier may very well want to go to Lenovo to and provide services to them. Well guess what, it's going to take 40 days, the onboard to Lenovo. >>But if they're part of the trust or supplier network and they've already onboarded to IBM, they're well on their way. You're being visible to all of these other buyers that are part of the IBM network, like Lenovo and many others. And instead of taking 40 days, maybe it only takes five days. All right. So radically, radically, you know, improving the time it takes them. You know, with companies like Ford making ventilators and masks, it will kind of be able to onboard Ford into, you know, health care, uh, companies. But you know, we want to be able to do it with speed. So trust your supplier is a great use of blockchain. Two, expand a buyer and suppliers. Mmm. Exposure. Mmm. And they expand their network to quickly onboard. And you know, with the trust that you get an exchanging data from blockchain with the Mmm provenance, that Hey, this company information was truly vetted by one of the trusted members of the network. >>There's no fee or trepidation that somehow these records were tampered with or, or misused. So that's one example they have of using blockchain. That's a huge, uh, example that you gave because you're right, there are thousands and thousands of companies that are pivoting to making, like you said, ventilators and masks and yeah, they're moving so fast and there's gotta be a trust involved. On the one hand, they're moving fast to try to save their businesses or you know, in the case of Ford, you help save the, the country or the world. On the other hand, you know, there's risks there. So that, that helps. I want to understand me. Pasa basically is, if I understand it, you can privately share, uh, information on folks that are asymptomatic but might be carriers of covert 19. Am I getting that right on? Okay. So me Pasa starts as a project, uh, from a company called has Sarah and their CEO Jonathan Levy. >>And among other things, Jonathan Levy is an amazing, uh, software developer and he's helped us and the community at large, bill, the Hyperledger fabric, uh, blockchain technology, that's part of IBM. Mmm. The power is IBM blockchain. So Jonathan, I have this idea because w what was happening is there were many, many data sources, you know, from the very popular and well known, uh, Johns Hopkins source. And we have information coming from the weather company. There are other governments, um, putting out data. Jonathan had this, this idea of a verified Mmm. Data hub, right? So how do we kind of bring that information together in a hub where a developer can now to get access to not just one feed, but many feeds knowing that both the data is an a normalized format. So that's easy to consume. And like if you're consuming 10 different data sources, you don't have to think about 10 different ways to interact it. >>No kind of normalizing it through a fewer, like maybe one, but also that we really authentically know that this is the world health organization. This is indeed John Hopkins. So we have that trust. So, okay. Yeah. With me, Pasa being I'm a data hub four, uh, information verified information related to the Kronos virus, really laying a foundation now for a new class of applications that can mash up information to create new insights, perhaps applying Mmm. Artificial intelligence machine learning to really look not just at any one of those, uh, data sources, but now look across data sources, um, and start to make some informed decisions. No, I have to say operate with the lights on, uh, and with certainty that the information is correct. So me Pasa is that foundation and we have a call for code happening that IBM is hosting for developers to come out and okay. Bring their best ideas forward and X for exposing me Pasa as a service to the, in this hackathon so that developers can bring some of their best ideas and kind of help those best ideas come alive with me. Me has a resource. >>That's great. So we've got two, we got the supply chain, we just need to share the Pasa. There's the other one then I think we can all relate to is the secure key authentication, >>which I love. >>Uh, maybe you can explain that and talk about the role that blockchain >>we're launching fits, right. So you know, there is people working from home and digital identity verification. It is key. You know, think about it. You're working remotely, you're using tools like zoom. Um, there's a huge spike in calls and online requests from tele-health or government benefits programs. Yeah. So this is all happening. Everything behind the scenes is, yeah. Around that is, is this user who they say they are, is this doctor who they say they are, et cetera. And there are scams and frauds out there. So working with speed, it means working with certainty. and with the verified me networks set out to do a couple of years ago and the beautiful part is, you know, it's ready to go now for this, for this particular usage it's been using. Mmm. Basically think about it as my identity is my identity and I get to lease out information too different institutions to use it for my benefit, not necessarily just for their benefit. >>So it's almost like digital rights management. Like if you put out a digital piece of art or music, you can control the rights. Who gets to use it? What's the terms and conditions, um, on, on your terms? So verified me, um, allows through a mobile app users to invite institutions who represent them, verify them. No. And so I'll allow my department of motor vehicle and my employer, Mmm. Two to verify me, right? Because I want to go back to work sooner. I want to make sure my work environment, um, I'm making this up. I want to make sure my work environment, the people have been tested and vaccinated, but I don't want to necessarily, you know, kind of abuse people's privacy. Right? So I'll opt in, I'll share that information. I'll get my, my doctor and my, uh, department of motor vehicle to say, yes, this is Gary. >>He's from this address. Yes, he has been vaccinated and now I can kind of onboard to services as much quicker whether that service is going through TSA. Do you get on an airplane badging back into my office or you know, signing on to a, you know, telemedicine, a service or government, a benefits program, et cetera. So verify me is using the self, uh, at the station through a mobile application to help speed up the process of knowing that that is truly you and you truly want this service. Uh, and you are also calling the shots as to that. What happens with your information that, you know, it's not spread all over the interweb it's under your control at all time. Right. So I think it's the best of all worlds. The national Institute for standards and technology looked at, verified me. They're like, Oh my gosh, this is like the perfect storm of goodness for identity. >>They actually appointed, yeah, it has a term, it's called triple blind data exchange. It sounds like a magical act. A triple blind data exchange means the requester. Mmm. Doesn't know who the provider is and less know the requester. Um, allows the provider to know, Mmm, the provider doesn't know who the requester requested, doesn't know who the prior provider is that is double-blind. And then the network provider doesn't know either. Right. But somehow across disformed and that's the magic of blockchain. I'm allowing that to happen and with that we can move forward knowing we're sharing information where it matters without the risk of it leaking out to places we don't want to do. So great application of secure key and verified me. Yeah, I love that. Then the whole concept of being able to control your own data. You hear so much today about, you know, testing and in contact tracing using mobile technology to do that. >>But big privacy concerns. I've always felt like, you know, blockchain for so many applications in healthcare or just being able to, as you say, control your own data. I want to better understand the technology behind this. When I think about blockchain, Mmm. I obviously you don't think about it. Cryptography, you've mentioned developers a number of times. There's software engineering. Yeah. Distributed ledger. Um, I mean there's, there's game theory in the, in the, in the cryptocurrency world, we're not talking about that, but there's the confluence of these technologies coming to them. What's the technology underneath these, these applications? Talking about it there, there is an open source, an organization called Hyperledger. It's part of the Linux foundation. They're the gold standard and open source, openly governed, Mmm. Technology you know, early on in 2018 yep. 18, 26. I mean, we got involved, started contributing code and developers. >>Two Hyperledger fabric, which is the industry's first permissioned blockchain technology. Permission meaning members are accountable. So the network versus Bitcoin where members are anonymous and to pass industry Reggie regulations, you can't be anonymous. You have to be accountable. Um, that's not to say that you can't, okay. Work privately, you know, so you're accountable. But transactions in the network, Mmm. Only gets shared with those that have a need, need to know. So that the foundation is Hyperledger fabric. And IBM has a commercial offering called the IBM blockchain platform that embodies that. That kind of is a commercial distribution of Hyperledger fabric plus a set of advanced tools to make it really easy to work with. The open source. All the networks that I talked about are operating their network across the worldwide IBM public cloud. And so cloud technology lays a really big part of blockchain because blockchains are networks. >>Mmm. You know, our technology, IBM blockchain platform runs really well in the IBM wow. But it also allows you to run anywhere, right? Or like to say where it matters most. So you may have companies, I'm running blockchain nodes in the IBM cloud. You may have others running it on their own premises behind their firewall. You might have others running an Amazon and Microsoft Azure. Right. So we use, um, you may have heard of red hat open shift, the container technology so that we can run Mmm. Parts of a blockchain network, I guess they said where they matter most and you get strengthened a blockchain network based on the diversity of the operators. Because if it was all operated by one operator, there would be a chance maybe that there can be some collusion happening. But now if you could run it know across different geographies across the IBM cloud. >>So almost three networks all run on use this technology or run on the IBM cloud. And Dave, one more thing. If you look at these applications, they're just modern application, you know, their mobile front ends, their web portals and all of that kind of, okay. Okay. The blockchain part of these applications, usually it's only 20% of the overall endeavor that companies are going through. The other 80% it's business as usual. I'm building a modern cloud application. So what we're doing in IBM with, but you know, red hat with OpenShift with our cloud packs, which brings various enterprise software across different disciplines, blends and domains like integration, application, data, security. All of those things come together to fill the other 80% the above and beyond blockchain. So these three companies, okay. You know, 99 plus others are building applications as modern cloud applications that leverage this blockchain technology. So you don't have to be a cryptographer or you know, a distributed database expert. It's all, it's all embodied in this code. Mmm. Available on the IBM cloud, 29 cents a CPU hour. It was approximately the price. So it's quite affordable. And you know, that's what we've delivered. >>Well, the thing about that, that last point about the cloud is it law, it allows organizations, enterprises to experiment very cheaply, uh, and so they can get, uh, an MVP out or a proof of concept out very quickly, very cheaply, and then iterate, uh, extremely quickly. That to me is the real benefit, the cloud era and the pricing model. >>I just mentioned, David, as I said it when I started, you know, it's like we were working out in a gym, but we weren't quite sure. We knew why we were, we were so keen on getting fit. And what I see now is this, you know, blossoming of users who are looking at, you know, a new agreement. We thought we understood digital transformation. Mmm. But there's a whole new nice to be digitized right now. You know, we're probably not going to be jumping on planes and trains, uh, working as, as, as more intimately as we were face to face. So the need for new digital applications that link people together. Uh, w we're seeing so many use cases from, um, trade finance to food safety, to proxy voting for stock, know all of these applications that we're kind of moving along at a normal speed. I've been hyper accelerated, uh, because of the crisis we're in. So blockchain no. Couldn't come any sooner. >>Yeah. You know, I want to ask you, as a technologist, uh, you know, I've learned over the years, there's a lot of ways to skin a cat. Um, could you do the types of things that you're talking about without blockchain? Um, I'm, I'm sure there are ways, but, but why is blockchain sort of the right path, >>Dave? Mmm. You can, you can certainly do things with databases. Mmm. But if you want the trust, it's as simple as this. A database traditionally has a single administrator that sets the rules up for when a transaction comes in. Mmm. What it takes to commit that transaction. And if the rules are met, the transactions committed, um, the database administrator has access who commands like delete and update. So at some level you can never be a hundred percent sure that that data was the data that was intended in there. With a blockchain, there's multiple administrators to the ledger. So the ledger is distributed and shared across multiple administrators. When a transaction is submitted, it is first proposed for those administrators, a process of consent happens. And then, and only then when the majority of the group agrees that it's a valid transaction, is it committed? And when it's committed, it's committed in a way that's cryptographically linked two other transactions in the ledger, I'm making it. >>Mmm tamper-proof right. Or very difficult to tamper with. And unlike databases, blockchains are append only so they don't have update and delete. Okay. All right. So if you really want that center of trusted data that is a tested, you know, that has checks and balances across different organizations, um, blockchain is the key to do it, you know? So could you do it in data with a database? Yes. But you have to trust that central organization. And for many applications, that's just fine. All right. But if we want to move quickly, we really want to share systems of record. Mmm. I hear you. Sharing a system of record, you have regulatory obligations, you can say, Oh, sorry, the record was wrong, but it was put in there by, by this other company. Well, they'll say, well, >>okay, >>nice for the other company, but sorry, you're the one in trouble. So with a blockchain, we have to bring assurances that we can't get into that kind of situation, right? So that shared Mmm. Distributed database that is kind of provides this tamper resistant audit log becomes the Colonel cross. And then with the privacy preservation that you get from encryption and privacy techniques, um, like we have like these things, both channels, um, you can transact, um Hm. And be accountable, but also, Mmm. Only share of transactions with those that have a need to know, right? So you get that level of privacy in there. And that combination of trust and privacy is the secret sauce that makes blockchain unique and quite timely for this. So yeah, check it out. I mean, on the IBM cloud, it's effortless. So to get up and running, you know, building a cloud native application with blockchain and you know, if you're used to doing things, um, on other clouds or back at the home base, we have the IBM blockchain software, which you can deploy. Yeah. Open shift anywhere. So we have what you need in a time of need. >>And as a technologist, again, you're being really, I think, honest and careful about the word tamper. You call it tamper resistant. And if I understand it right, that, I mean, obviously you can fish for somebody's credentials. Yeah. That's, you know, that's one thing. But if I understand that, that more than 50% of the peers in the community, it must agree to tamper in order for the system. You tampered with it. And, and that is the beauty of, of blockchain and the brilliance. Okay. >>Okay. Yeah. And, and, and for, um, performance reasons we've created optimizations. Like you can set a consensus policy up because maybe one transaction it's okay just to have a couple people agree and say, Oh, well, you know, out of the a hundred nodes, Mmm. Three agree, it's good enough. Okay. Other, other policies may be more stringent depending on the nature of the data and the transaction, right? So you can tone, you can kind of tune that in based on the class of transaction. And so it's kind of good and that's how we can get performance levels in the, you know, thousand plus. In fact, IBM and RBC, um, recently did, um, a series of performance analysis because RBC said, Hey, can I use this for some of my bank to bank exchanges and we need to support over a thousand transactions per second. They were able, in their use case, there's support over 3000. Transact for a second. Okay. Mmm. You know, that we were very encouraged by that. I'm glad you clarified that because, so essentially you're saying you can risk adjust the policies if you will. >>That's great to know. Mmm. I could go on forever on this topic. Well, we're unfortunately, Jerry, we're well over our time, but I want to thank you for coming back, planning this important topic. Thrilled. IBM has taken a leadership position here, and I think, you know, to your point, this pandemic is just going to, can accelerate a lot of things and blockchain is, but in my view anyway, one of them. Thank you, Dave. Oh, great questions and I really appreciate it. So everyone out there, um, stay safe. Stay healthy. All right. Thank you Jerry, and thank you for watching everybody. This is Dave Volante for the cube. Our coverage of the IBM think digital 2020 event. We'll be right back. Perfect. The short break.

[Music] [Music] [Music] [Laughter] [Laughter] [Laughter] [Laughter] [Music] [Music] [Music] [Music] you you [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Applause] [Music] wake up feeling blessed peace you warned that Russia ain't afraid to show it I'll expose it if I dressed up riding in that Chester roasted nigga catch you slippin on myself rocks on I messed up like yes sir [Music] [Music] [Music] [Music] our program [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] you are not welcome to Red Hat summit 2018 2018 [Music] [Music] [Music] [Laughter] [Music] Wow that is truly the coolest introduction I've ever had thank you Wow I don't think I feel cool enough to follow an interaction like that Wow well welcome to the Red Hat summit this is our 14th annual event and I have to say looking out over this audience Wow it's great to see so many people here joining us this is by far our largest summit to date not only did we blow through the numbers we've had in the past we blew through our own expectations this year so I know we have a pretty packed house and I know people are still coming in so it's great to see so many people here it's great to see so many familiar faces when I had a chance to walk around earlier it's great to see so many new people here joining us for the first time I think the record attendance is an indication that more and more enterprises around the world are seeing the power of open source to help them with their challenges that they're facing due to the digital transformation that all of enterprises around the world are going through the theme for the summit this year is ideas worth exploring and we intentionally chose that because as much as we are all going through this digital disruption and the challenges associated with it one thing I think is becoming clear no one person and certainly no one company has the answers to these challenges right this isn't a problem where you can go buy a solution this is a set of capabilities that we all need to build it's a set of cultural changes that we all need to go through and that's going to require the best ideas coming from so many different places so we're not here saying we have the answers we're trying to convene the conversation right we want to serve as a catalyst bringing great minds together to share ideas so we all walk out of here at the end of the week a little wiser than when we first came here we do have an amazing agenda for you we have over 7,000 attendees we may be pushing 8,000 by the time we got through this morning we have 36 keynote speakers and we have a hundred and twenty-five breakout sessions and have to throw in one plug scheduling 325 breakout sessions is actually pretty difficult and so we used the Red Hat business optimizer which is an AI constraint solver that's new in the Red Hat decision manager to help us plan the summit because we have individuals who have a clustered set of interests and we want to make sure that when we schedule two breakout sessions we do it in a way that we don't have overlapping sessions that are really important to the same individual so we tried to use this tool and what we understand about people's interest in history of what they wanted to do to try to make sure that we spaced out different times for things of similar interests for similar people as well as for people who stood in the back of breakouts before and I know I've done that too we've also used it to try to optimize room size so hopefully we will do our best to make sure that we've appropriately sized the spaces for those as well so it's really a phenomenal tool and I know it's helped us a lot this year in addition to the 325 breakouts we have a lot of our customers on stage during the main sessions and so you'll see demos you'll hear from partners you'll hear stories from so many of our customers not on our point of view of how to use these technologies but their point of views of how they actually are using these technologies to solve their problems and you'll hear over and over again from those keynotes that it's not just about the technology it's about how people are changing how people are working to innovate to solve those problems and while we're on the subject of people I'd like to take a moment to recognize the Red Hat certified professional of the year this is known award we do every year I love this award because it truly recognizes an individual for outstanding innovation for outstanding ideas for truly standing out in how they're able to help their organization with Red Hat technologies Red Hat certifications help system administrators application developers IT architects to further their careers and help their organizations by being able to advance their skills and knowledge of Red Hat products and this year's winner really truly is a great example about how their curiosity is helped push the limits of what's possible with technology let's hear a little more about this year's winner when I was studying at the University I had computer science as one of my subjects and that's what created the passion from the very beginning they were quite a few institutions around my University who were offering Red Hat Enterprise Linux as a course and a certification paths through to become an administrator Red Hat Learning subscription has offered me a lot more than any other trainings that have done so far that gave me exposure to so many products under red hair technologies that I wasn't even aware of I started to think about the better ways of how these learnings can be put into the real life use cases and we started off with a discussion with my manager saying I have to try this product and I really want to see how it really fits in our environment and that product was Red Hat virtualization we went from deploying rave and then OpenStack and then the open shift environment we wanted to overcome some of the things that we saw as challenges to the speed and rapidity of release and code etc so it made perfect sense and we were able to do it in a really short space of time so you know we truly did use it as an Innovation Lab I think idea is everything ideas can change the way you see things an Innovation Lab was such an idea that popped into my mind one fine day and it has transformed the way we think as a team and it's given that playpen to pretty much everyone to go and test their things investigate evaluate do whatever they like in a non-critical non production environment I recruited Neha almost 10 years ago now I could see there was a spark a potential with it and you know she had a real Drive a real passion and you know here we are nearly ten years later I'm Neha Sandow I am a Red Hat certified engineer all right well everyone please walk into the states to the stage Neha [Music] [Applause] congratulations thank you [Applause] I think that - well welcome to the red has some of this is your first summit yes it is thanks so much well fantastic sure well it's great to have you here I hope you have a chance to engage and share some of your ideas and enjoy the week thank you thank you congratulations [Applause] neha mentioned that she first got interest in open source at university and it made me think red hats recently started our Red Hat Academy program that looks to programmatically infuse Red Hat technologies in universities around the world it's exploded in a way we had no idea it's grown just incredibly rapidly which i think shows the interest that there really is an open source and working in an open way at university so it's really a phenomenal program I'm also excited to announce that we're launching our newest open source story this year at Summit it's called the science of collective discovery and it looks at what happens when communities use open hardware to monitor the environment around them and really how they can make impactful change based on that technologies the rural premier that will be at 5:15 on Wednesday at McMaster Oni West and so please join us for a drink and we'll also have a number of the experts featured in that and you can have a conversation with them as well so with that let's officially start the show please welcome red hat president of products and technology Paul Cormier [Music] Wow morning you know I say it every year I'm gonna say it again I know I repeat myself it's just amazing we are so proud here to be here today too while you all week on how far we've come with opens with open source and with the products that we that we provide at Red Hat so so welcome and I hope the pride shows through so you know I told you Seven Summits ago on this stage that the future would be open and here we are just seven years later this is the 14th summit but just seven years later after that and much has happened and I think you'll see today and this week that that prediction that the world would be open was a pretty safe predict prediction but I want to take you just back a little bit to see how we started here and it's not just how Red Hat started here this is an open source in Linux based computing is now in an industry norm and I think that's what you'll you'll see in here this week you know we talked back then seven years ago when we put on our prediction about the UNIX error and how Hardware innovation with x86 was it was really the first step in a new era of open innovation you know companies like Sun Deck IBM and HP they really changed the world the computing industry with their UNIX models it was that was really the rise of computing but I think what we we really saw then was that single company innovation could only scale so far could really get so far with that these companies were very very innovative but they coupled hardware innovation with software innovation and as one company they could only solve so many problems and even which comp which even complicated things more they could only hire so many people in each of their companies Intel came on the scene back then as the new independent hardware player and you know that was really the beginning of the drive for horizontal computing power and computing this opened up a brand new vehicle for hardware innovation a new hardware ecosystem was built around this around this common hardware base shortly after that Stallman and leanness they had a vision of his of an open model that was created and they created Linux but it was built around Intel this was really the beginning of having a software based platform that could also drive innovation this kind of was the beginning of the changing of the world here that system-level innovation now having a hardware platform that was ubiquitous and a software platform that was open and ubiquitous it really changed this system level innovation and that continues to thrive today it was only possible because it was open this could not have happened in a closed environment it allowed the best ideas from anywhere from all over to come in in win only because it was the best idea that's what drove the rate of innovation at the pace you're seeing today and it which has never been seen before we at Red Hat we saw the need to bring this innovation to solve real-world problems in the enterprise and I think that's going to be the theme of the show today you're going to see us with our customers and partners talking about and showing you some of those real-world problems that we are sought solving with this open innovation we created rel back then for this for the enterprise it started it's it it wasn't successful because it's scaled it was secure and it was enterprise ready it once again changed the industry but this time through open innovation this gave the hardware ecosystem a software platform this open software platform gave the hardware ecosystem a software platform to build around it Unleashed them the hardware side to compete and thrive it enabled innovation from the OEMs new players building cheaper faster servers even new architectures from armed to power sprung up with this change we have seen an incredible amount of hardware innovation over the last 15 years that same innovation happened on the software side we saw powerful implementations of bare metal Linux distributions out in the market in fact at one point there were 300 there are over 300 distributions out in the market on the foundation of Linux powerful open-source equivalents were even developed in every area of Technology databases middleware messaging containers anything you could imagine innovation just exploded around the Linux platform in innovation it's at the core also drove virtualization both Linux and virtualization led to another area of innovation which you're hearing a lot about now public cloud innovation this innovation started to proceed at a rate that we had never seen before we had never experienced this in the past in this unprecedented speed of innovation and software was now possible because you didn't need a chip foundry in order to innovate you just needed great ideas in the open platform that was out there customers seeing this innovation in the public cloud sparked it sparked their desire to build their own linux based cloud platforms and customers are now are now bringing that cloud efficiency on-premise in their own data centers public clouds demonstrated so much efficiency the data centers and architects wanted to take advantage of it off premise on premise I'm sorry within their own we don't within their own controlled environments this really allowed companies to make the most of existing investments from data centers to hardware they also gained many new advantages from data sovereignty to new flexible agile approaches I want to bring Burr and his team up here to take a look at what building out an on-premise cloud can look like today Bure take it away I am super excited to be with all of you here at Red Hat summit I know we have some amazing things to show you throughout the week but before we dive into this demonstration I want you to take just a few seconds just a quick moment to think about that really important event your life that moment you turned on your first computer maybe it was a trs-80 listen Claire and Atari I even had an 83 b2 at one point but in my specific case I was sitting in a classroom in Hawaii and I could see all the way from Diamond Head to Pearl Harbor so just keep that in mind and I turn on an IBM PC with dual floppies I don't remember issuing my first commands writing my first level of code and I was totally hooked it was like a magical moment and I've been hooked on computers for the last 30 years so I want you to hold that image in your mind for just a moment just a second while we show you the computers we have here on stage let me turn this over to Jay fair and Dini here's our worldwide DevOps manager and he was going to show us his hardware what do you got Jay thank you BER good morning everyone and welcome to Red Hat summit we have so many cool things to show you this week I am so happy to be here and you know my favorite thing about red hat summit is our allowed to kind of share all of our stories much like bird just did we also love to you know talk about the hardware and the technology that we brought with us in fact it's become a bit of a competition so this year we said you know let's win this thing and we actually I think we might have won we brought a cloud with us so right now this is a private cloud for throughout the course of the week we're going to turn this into a very very interesting open hybrid cloud right before your eyes so everything you see here will be real and happening right on this thing right behind me here so thanks for our four incredible partners IBM Dell HP and super micro we've built a very vendor heterogeneous cloud here extra special thanks to IBM because they loaned us a power nine machine so now we actually have multiple architectures in this cloud so as you know one of the greatest benefits to running Red Hat technology is that we run on just about everything and you know I can't stress enough how powerful that is how cost-effective that is and it just makes my life easier to be honest so if you're interested the people that built this actual rack right here gonna be hanging out in the customer success zone this whole week it's on the second floor the lobby there and they'd be glad to show you exactly how they built this thing so let me show you what we actually have in this rack so contained in this rack we have 1056 physical chorus right here we have five and a half terabytes of RAM and just in case we threw 50 terabytes of storage in this thing so burr that's about two million times more powerful than that first machine you boot it up thanks to a PC we're actually capable of putting all the power needs and cooling right in this rack so there's your data center right there you know it occurred to me last night that I can actually pull the power cord on this thing and kick it up a notch we could have the world's first mobile portable hybrid cloud so I'm gonna go ahead and unplug no no no no no seriously it's not unplug the thing we got it working now well Berg gets a little nervous but next year we're rolling this thing around okay okay so to recap multiple vendors check multiple architectures check multiple public clouds plug right into this thing check and everything everywhere is running the same software from Red Hat so that is a giant check so burn Angus why don't we get the demos rolling awesome so we have totally we have some amazing hardware amazing computers on this stage but now we need to light it up and we have Angus Thomas who represents our OpenStack engineering team and he's going to show us what we can do with this awesome hardware Angus thank you Beth so this was an impressive rack of hardware to Joe has bought a pocket stage what I want to talk about today is putting it to work with OpenStack platform director we're going to turn it from a lot of potential into a flexible scalable private cloud we've been using director for a while now to take care of managing hardware and orchestrating the deployment of OpenStack what's new is that we're bringing the same capabilities for on-premise manager the deployment of OpenShift director deploying OpenShift in this way is the best of both worlds it's bare-metal performance but with an underlying infrastructure as a service that can take care of deploying in new instances and scaling out and a lot of the things that we expect from a cloud provider director is running on a virtual machine on Red Hat virtualization at the top of the rack and it's going to bring everything else under control what you can see on the screen right now is the director UI and as you see some of the hardware in the rack is already being managed at the top level we have information about the number of cores in the amount of RAM and the disks that each machine have if we dig in a bit there's information about MAC addresses and IPs and the management interface the BIOS kernel version dig a little deeper and there is information about the hard disks all of this is important because we want to be able to make sure that we put in workloads exactly where we want them Jay could you please power on the two new machines at the top of the rack sure all right thank you so when those two machines come up on the network director is going to see them see that they're new and not already under management and is it immediately going to go into the hardware inspection that populates this database and gets them ready for use so we also have profiles as you can see here profiles are the way that we match the hardware in a machine to the kind of workload that it's suited to this is how we make sure that machines that have all the discs run Seth and machines that have all the RAM when our application workouts for example there's two ways these can be set when you're dealing with a rack like this you could go in an individually tag each machine but director scales up to data centers so we have a rules matching engine which will automatically take the hardware profile of a new machine and make sure it gets tagged in exactly the right way so we can automatically discover new machines on the network and we can automatically match them to a profile that's how we streamline and scale up operations now I want to talk about deploying the software we have a set of validations we've learned over time about the Miss configurations in the underlying infrastructure which can cause the deployment of a multi node distributed application like OpenStack or OpenShift to fail if you have the wrong VLAN tags on a switch port or DHCP isn't running where it should be for example you can get into a situation which is really hard to debug a lot of our validations actually run before the deployment they look at what you're intending to deploy and they check in the environment is the way that it should be and they'll preempts problems and obviously preemption is a lot better than debugging something new that you probably have not seen before is director managing multiple deployments of different things side by side before we came out on stage we also deployed OpenStack on this rack just to keep me honest let me jump over to OpenStack very quickly a lot of our opens that customers will be familiar with this UI and the bare metal deployment of OpenStack on our rack is actually running a set of virtual machines which is running Gluster you're going to see that put to work later on during the summit Jay's gone to an awful lot effort to get this Hardware up on the stage so we're going to use it as many different ways as we can okay let's deploy OpenShift if I switch over to the deployed a deployment plan view there's a few steps first thing you need to do is make sure we have the hardware I already talked about how director manages hardware it's smart enough to make sure that it's not going to attempt to deploy into machines they're already in use it's only going to deploy on machines that have the right profile but I think with the rack that we have here we've got enough next thing is the deployment configuration this is where you get to customize exactly what's going to be deployed to make sure that it really matches your environment if they're external IPs for additional services you can set them here whatever it takes to make sure that the deployment is going to work for you as you can see on the screen we have a set of options around enable TLS for encryption network traffic if I dig a little deeper there are options around enabling ipv6 and network isolation so that different classes of traffic there are over different physical NICs okay then then we have roles now roles this is essentially about the software that's going to be put on each machine director comes with a set of roles for a lot of the software that RedHat supports and you can just use those or you can modify them a little bit if you need to add a monitoring agent or whatever it might be or you can create your own custom roles director has quite a rich syntax for custom role definition and custom Network topologies whatever it is you need in order to make it work in your environment so the rawls that we have right now are going to give us a working instance of openshift if I go ahead and click through the validations are all looking green so right now I can click the button start to the deploy and you will see things lighting up on the rack directors going to use IPMI to reboot the machines provisioned and with a trail image was the containers on them and start up the application stack okay so one last thing once the deployment is done you're going to want to keep director around director has a lot of capabilities around what we call de to operational management bringing in new Hardware scaling out deployments dealing with updates and critically doing upgrades as well so having said all of that it is time for me to switch over to an instance of openshift deployed by a director running on bare metal on our rack and I need to hand this over to our developer team so they can show what they can do it thank you that is so awesome Angus so what you've seen now is going from bare metal to the ultimate private cloud with OpenStack director make an open shift ready for our developers to build their next generation applications thank you so much guys that was totally awesome I love what you guys showed there now I have the honor now I have the honor of introducing a very special guest one of our earliest OpenShift customers who understands the necessity of the private cloud inside their organization and more importantly they're fundamentally redefining their industry please extend a warm welcome to deep mar Foster from Amadeus well good morning everyone a big thank you for having armadillos here and myself so as it was just set I'm at Mario's well first of all we are a large IT provider in the travel industry so serving essentially Airlines hotel chains this distributors like Expedia and others we indeed we started very early what was OpenShift like a bit more than three years ago and we jumped on it when when Retta teamed with Google to bring in kubernetes into this so let me quickly share a few figures about our Mario's to give you like a sense of what we are doing and the scale of our operations so some of our key KPIs one of our key metrics is what what we call passenger borders so that's the number of customers that physically board a plane over the year so through our systems it's roughly 1.6 billion people checking in taking the aircrafts on under the Amarillo systems close to 600 million travel agency bookings virtually all airlines are on the system and one figure I want to stress out a little bit is this one trillion availability requests per day that's when I read this figure my mind boggles a little bit so this means in continuous throughput more than 10 million hits per second so of course these are not traditional database transactions it's it's it's highly cached in memory and these applications are running over like more than 100,000 course so it's it's it's really big stuff so today I want to give some concrete feedback what we are doing so I have chosen two applications products of our Mario's that are currently running on production in different in different hosting environments as the theme here is of this talk hybrid cloud and so I want to give some some concrete feedback of how we architect the applications and of course it stays relatively high level so here I have taken one of our applications that is used in the hospitality environment so it's we have built this for a very large US hotel chain and it's currently in in full swing brought into production so like 30 percent of the globe or 5,000 plus hotels are on this platform not so here you can see that we use as the path of course on openshift on that's that's the most central piece of our hybrid cloud strategy on the database side we use Oracle and Couchbase Couchbase is used for the heavy duty fast access more key value store but also to replicate data across two data centers in this case it's running over to US based data centers east and west coast topology that are fit so run by Mario's that are fit with VMware on for the virtualization OpenStack on top of it and then open shift to host and welcome the applications on the right hand side you you see the kind of tools if you want to call them tools that we use these are the principal ones of course the real picture is much more complex but in essence we use terraform to map to the api's of the underlying infrastructure so they are obviously there are differences when you run on OpenStack or the Google compute engine or AWS Azure so some some tweaking is needed we use right at ansible a lot we also use puppet so you can see these are really the big the big pieces of of this sense installation and if we look to the to the topology again very high high level so these two locations basically map the data centers of our customers so they are in close proximity because the response time and the SLA is of this application is are very tight so that's an example of an application that is architectures mostly was high ability and high availability in minds not necessarily full global worldwide scaling but of course it could be scaled but here the idea is that we can swing from one data center to the unit to the other in matters of of minutes both take traffic data is fully synchronized across those data centers and while the switch back and forth is very fast the second example I have taken is what we call the shopping box this is when people go to kayak or Expedia and they're getting inspired where they want to travel to this is really the piece that shoots most of transit of the transactions into our Mario's so we architect here more for high scalability of course availability is also a key but here scaling and geographical spread is very important so in short it runs partially on-premise in our Amarillo Stata Center again on OpenStack and we we deploy it mostly in the first step on the Google compute engine and currently as we speak on Amazon on AWS and we work also together with Retta to qualify the whole show on Microsoft Azure here in this application it's it's the same building blocks there is a large swimming aspect to it so we bring Kafka into this working with records and another partner to bring Kafka on their open shift because at the end we want to use open shift to administrate the whole show so over time also databases and the topology here when you look to the physical deployment topology while it's very classical we use the the regions and the availability zone concept so this application is spread over three principal continental regions and so it's again it's a high-level view with different availability zones and in each of those availability zones we take a hit of several 10,000 transactions so that was it really in very short just to give you a glimpse on how we implement hybrid clouds I think that's the way forward it gives us a lot of freedom and it allows us to to discuss in a much more educated way with our customers that sometimes have already deals in place with one cloud provider or another so for us it's a lot of value to set two to leave them the choice basically what up that was a very quick overview of what we are doing we were together with records are based on open shift essentially here and more and more OpenStack coming into the picture hope you found this interesting thanks a lot and have a nice summer [Applause] thank you so much deeper great great solution we've worked with deep Marv and his team for a long for a long time great solution so I want to take us back a little bit I want to circle back I sort of ended talking a little bit about the public cloud so let's circle back there you know even so even though some applications need to run in various footprints on premise there's still great gains to be had that for running certain applications in the public cloud a public cloud will be as impactful to to the industry as as UNIX era was of computing was but by itself it'll have some of the same limitations and challenges that that model had today there's tremendous cloud innovation happening in the public cloud it's being driven by a handful of massive companies and much like the innovation that sundeck HP and others drove in a you in the UNIX era of community of computing many customers want to take advantage of the best innovation no matter where it comes from buddy but as they even eventually saw in the UNIX era they can't afford the best innovation at the cost of a siloed operating environment with the open community we are building a hybrid application platform that can give you access to the best innovation no matter which vendor or which cloud that it comes from letting public cloud providers innovate and services beyond what customers or anyone can one provider can do on their own such as large scale learning machine learning or artificial intelligence built on the data that's unique probably to that to that one cloud but consumed in a common way for the end customer across all applications in any environment on any footprint in in their overall IT infrastructure this is exactly what rel brought brought to our customers in the UNIX era of computing that consistency across any of those footprints obviously enterprises will have applications for all different uses some will live on premise some in the cloud hybrid cloud is the only practical way forward I think you've been hearing that from us for a long time it is the only practical way forward and it'll be as impactful as anything we've ever seen before I want to bring Byrne his team back to see a hybrid cloud deployment in action burr [Music] all right earlier you saw what we did with taking bare metal and lighting it up with OpenStack director and making it openshift ready for developers to build their next generation applications now we want to show you when those next turn and generation applications and what we've done is we take an open shift and spread it out and installed it across Asia and Amazon a true hybrid cloud so with me on stage today as Ted who's gonna walk us through an application and Brent Midwood who's our DevOps engineer who's gonna be making sure he's monitoring on the backside that we do make sure we do a good job so at this point Ted what have you got for us Thank You BER and good morning everybody this morning we are running on the stage in our private cloud an application that's providing its providing fraud detection detect serves for financial transactions and our customer base is rather large and we occasionally take extended bursts of traffic of heavy traffic load so in order to keep our latency down and keep our customers happy we've deployed extra service capacity in the public cloud so we have capacity with Microsoft Azure in Texas and with Amazon Web Services in Ohio so we use open chip container platform on all three locations because openshift makes it easy for us to deploy our containerized services wherever we want to put them but the question still remains how do we establish seamless communication across our entire enterprise and more importantly how do we balance the workload across these three locations in such a way that we efficiently use our resources and that we give our customers the best possible experience so this is where Red Hat amq interconnect comes in as you can see we've deployed a MQ interconnect alongside our fraud detection applications in all three locations and if I switch to the MQ console we'll see the topology of the app of the network that we've created here so the router inside the on stage here has made connections outbound to the public routers and AWS and Azure these connections are secured using mutual TLS authentication and encrypt and once these connections are established amq figures out the best way auda matically to route traffic to where it needs to get to so what we have right now is a distributed reliable broker list message bus that expands our entire enterprise now if you want to learn more about this make sure that you catch the a MQ breakout tomorrow at 11:45 with Jack Britton and David Ingham let's have a look at the message flow and we'll dive in and isolate the fraud detection API that we're interested in and what we see is that all the traffic is being handled in the private cloud that's what we expect because our latencies are low and they're acceptable but now if we take a little bit of a burst of increased traffic we're gonna see that an EQ is going to push a little a bi traffic out onto the out to the public cloud so as you're picking up some of the load now to keep the Layton sees down now when that subsides as your finishes up what it's doing and goes back offline now if we take a much bigger load increase you'll see two things first of all asher is going to take a bigger proportion than it did before and Amazon Web Services is going to get thrown into the fray as well now AWS is actually doing less work than I expected it to do I expected a little bit of bigger a slice there but this is a interesting illustration of what's going on for load balancing mq load balancing is sending requests to the services that have the lowest backlog and in order to keep the Layton sees as steady as possible so AWS is probably running slowly for some reason and that's causing a and Q to push less traffic its way now the other thing you're going to notice if you look carefully this graph fluctuate slightly and those fluctuations are caused by all the variances in the network we have the cloud on stage and we have clouds in in the various places across the country there's a lot of equipment locked layers of virtualization and networking in between and we're reacting in real-time to the reality on the digital street so BER what's the story with a to be less I noticed there's a problem right here right now we seem to have a little bit performance issue so guys I noticed that as well and a little bit ago I actually got an alert from red ahead of insights letting us know that there might be some potential optimizations we could make to our environment so let's take a look at insights so here's the Red Hat insights interface you can see our three OpenShift deployments so we have the set up here on stage in San Francisco we have our Azure deployment in Texas and we also have our AWS deployment in Ohio and insights is highlighting that that deployment in Ohio may have some issues that need some attention so Red Hat insights collects anonymized data from manage systems across our customer environment and that gives us visibility into things like vulnerabilities compliance configuration assessment and of course Red Hat subscription consumption all of this is presented in a SAS offering so it's really really easy to use it requires minimal infrastructure upfront and it provides an immediate return on investment what insights is showing us here is that we have some potential issues on the configuration side that may need some attention from this view I actually get a look at all the systems in our inventory including instances and containers and you can see here on the left that insights is highlighting one of those instances as needing some potential attention it might be a candidate for optimization this might be related to the issues that you were seeing just a minute ago insights uses machine learning and AI techniques to analyze all collected data so we combine collected data from not only the system's configuration but also with other systems from across the Red Hat customer base this allows us to compare ourselves to how we're doing across the entire set of industries including our own vertical in this case the financial services industry and we can compare ourselves to other customers we also get access to tailored recommendations that let us know what we can do to optimize our systems so in this particular case we're actually detecting an issue here where we are an outlier so our configuration has been compared to other configurations across the customer base and in this particular instance in this security group were misconfigured and so insights actually gives us the steps that we need to use to remediate the situation and the really neat thing here is that we actually get access to a custom ansible playbook so if we want to automate that type of a remediation we can use this inside of Red Hat ansible tower Red Hat satellite Red Hat cloud forms it's really really powerful the other thing here is that we can actually apply these recommendations right from within the Red Hat insights interface so with just a few clicks I can select all the recommendations that insights is making and using that built-in ansible automation I can apply those recommendations really really quickly across a variety of systems this type of intelligent automation is really cool it's really fast and powerful so really quickly here we're going to see the impact of those changes and so we can tell that we're doing a little better than we were a few minutes ago when compared across the customer base as well as within the financial industry and if we go back and look at the map we should see that our AWS employment in Ohio is in a much better state than it was just a few minutes ago so I'm wondering Ted if this had any effect and might be helping with some of the issues that you were seeing let's take a look looks like went green now let's see what it looks like over here yeah doesn't look like the configuration is taking effect quite yet maybe there's some delay awesome fantastic the man yeah so now we're load balancing across the three clouds very much fantastic well I have two minute Ted I truly love how we can route requests and dynamically load transactions across these three clouds a truly hybrid cloud native application you guys saw here on on stage for the first time and it's a fully portable application if you build your applications with openshift you can mover from cloud to cloud to cloud on stage private all the way out to the public said it's totally awesome we also have the application being fully managed by Red Hat insights I love having that intelligence watching over us and ensuring that we're doing everything correctly that is fundamentally awesome thank you so much for that well we actually have more to show you but you're going to wait a few minutes longer right now we'd like to welcome Paul back to the stage and we have a very special early Red Hat customer an Innovation Award winner from 2010 who's been going boldly forward with their open hybrid cloud strategy please give a warm welcome to Monty Finkelstein from Citigroup [Music] [Music] hi Marty hey Paul nice to see you thank you very much for coming so thank you for having me Oh our pleasure if you if you wanted to we sort of wanted to pick your brain a little bit about your experiences and sort of leading leading the charge in computing here so we're all talking about hybrid cloud how has the hybrid cloud strategy influenced where you are today in your computing environment so you know when we see the variable the various types of workload that we had an hour on from cloud we see the peaks we see the valleys we see the demand on the environment that we have we really determined that we have to have a much more elastic more scalable capability so we can burst and stretch our environments to multiple cloud providers these capabilities have now been proven at City and of course we consider what the data risk is as well as any regulatory requirement so how do you how do you tackle the complexity of multiple cloud environments so every cloud provider has its own unique set of capabilities they have they're own api's distributions value-added services we wanted to make sure that we could arbitrate between the different cloud providers maintain all source code and orchestration capabilities on Prem to drive those capabilities from within our platforms this requires controlling the entitlements in a cohesive fashion across our on Prem and Wolfram both for security services automation telemetry as one seamless unit can you talk a bit about how you decide when you to use your own on-premise infrastructure versus cloud resources sure so there are multiple dimensions that we take into account right so the first dimension we talk about the risk so low risk - high risk and and really that's about the data classification of the environment we're talking about so whether it's public or internal which would be considered low - ooh confidential PII restricted sensitive and so on and above which is really what would be considered a high-risk the second dimension would be would focus on demand volatility and responsiveness sensitivity so this would range from low response sensitivity and low variability of the type of workload that we have to the high response sensitivity and high variability of the workload the first combination that we focused on is the low risk and high variability and high sensitivity for response type workload of course any of the workloads we ensure that we're regulatory compliant as well as we achieve customer benefits with within this environment so how can we give developers greater control of their their infrastructure environments and still help operations maintain that consistency in compliance so the main driver is really to use the public cloud is scale speed and increased developer efficiencies as well as reducing cost as well as risk this would mean providing develop workspaces and multiple environments for our developers to quickly create products for our customers all this is done of course in a DevOps model while maintaining the source and artifacts registry on-prem this would allow our developers to test and select various middleware products another product but also ensure all the compliance activities in a centrally controlled repository so we really really appreciate you coming by and sharing that with us today Monte thank you so much for coming to the red echo thanks a lot thanks again tamati I mean you know there's these real world insight into how our products and technologies are really running the businesses today that's that's just the most exciting part so thank thanks thanks again mati no even it with as much progress as you've seen demonstrated here and you're going to continue to see all week long we're far from done so I want to just take us a little bit into the path forward and where we we go today we've talked about this a lot innovation today is driven by open source development I don't think there's any question about that certainly not in this room and even across the industry as a whole that's a long way that we've come from when we started our first summit 14 years ago with over a million open source projects out there this unit this innovation aggregates into various community platforms and it finally culminates in commercial open source based open source developed products these products run many of the mission-critical applications in business today you've heard just a couple of those today here on stage but it's everywhere it's running the world today but to make customers successful with that interact innovation to run their real-world business applications these open source products have to be able to leverage increase increasingly complex infrastructure footprints we must also ensure a common base for the developer and ultimately the application no matter which footprint they choose as you heard mati say the developers want choice here no matter which no matter which footprint they are ultimately going to run their those applications on they want that flexibility from the data center to possibly any public cloud out there in regardless of whether that application was built yesterday or has been running the business for the last 10 years and was built on 10-year old technology this is the flexibility that developers require today but what does different infrastructure we may require different pieces of the technical stack in that deployment one example of this that Effects of many things as KVM which provides the foundation for many of those use cases that require virtualization KVM offers a level of consistency from a technical perspective but rel extends that consistency to add a level of commercial and ecosystem consistency for the application across all those footprints this is very important in the enterprise but while rel and KVM formed the foundation other technologies are needed to really satisfy the functions on these different footprints traditional virtualization has requirements that are satisfied by projects like overt and products like Rev traditional traditional private cloud implementations has requirements that are satisfied on projects like OpenStack and products like Red Hat OpenStack platform and as applications begin to become more container based we are seeing many requirements driven driven natively into containers the same Linux in different forms provides this common base across these four footprints this level of compatible compatibility is critical to operators who must best utilize the infinite must better utilize secure and deploy the infrastructure that they have and they're responsible for developers on the other hand they care most about having a platform that can creates that consistency for their applications they care about their services and the services that they need to consume within those applications and they don't want limitations on where they run they want service but they want it anywhere not necessarily just from Amazon they want integration between applications no matter where they run they still want to run their Java EE now named Jakarta EE apps and bring those applications forward into containers and micro services they need able to orchestrate these frameworks and many more across all these different footprints in a consistent secure fashion this creates natural tension between development and operations frankly customers amplify this tension with organizational boundaries that are holdover from the UNIX era of computing it's really the job of our platforms to seamlessly remove these boundaries and it's the it's the goal of RedHat to seamlessly get you from the old world to the new world we're gonna show you a really cool demo demonstration now we're gonna show you how you can automate this transition first we're gonna take a Windows virtual machine from a traditional VMware deployment we're gonna convert it into a KVM based virtual machine running in a container all under the kubernetes umbrella this makes virtual machines more access more accessible to the developer this will accelerate the transformation of those virtual machines into cloud native container based form well we will work this prot we will worked as capability over the product line in the coming releases so we can strike the balance of enabling our developers to move in this direction we want to be able to do this while enabling mission-critical operations to still do their job so let's bring Byrne his team back up to show you this in action for one more thanks all right what Red Hat we recognized that large organizations large enterprises have a substantial investment and legacy virtualization technology and this is holding you back you have thousands of virtual machines that need to be modernized so what you're about to see next okay it's something very special with me here on stage we have James Lebowski he's gonna be walking us through he's represents our operations folks and he's gonna be walking us through a mass migration but also is Itamar Hine who's our lead developer of a very special application and he's gonna be modernizing container izing and optimizing our application all right so let's get started James thanks burr yeah so as you can see I have a typical VMware environment here I'm in the vSphere client I've got a number of virtual machines a handful of them that make up my one of my applications for my development environment in this case and what I want to do is migrate those over to a KVM based right at virtualization environment so what I'm gonna do is I'm gonna go to cloud forms our cloud management platform that's our first step and you know cloud forms actually already has discovered both my rev environment and my vSphere environment and understands the compute network and storage there so you'll notice one of the capabilities we built is this new capability called migrations and underneath here I could begin to there's two steps and the first thing I need to do is start to create my infrastructure mappings what this will allow me to do is map my compute networking storage between vSphere and Rev so cloud forms understands how those relate let's go ahead and create an infrastructure mapping I'll call that summit infrastructure mapping and then I'm gonna begin to map my two environments first the compute so the clusters here next the data stores so those virtual machines happen to live on datastore - in vSphere and I'll target them a datastore data to inside of my revenue Arman and finally my networks those live on network 100 so I'll map those from vSphere to rover so once my infrastructure is map the next step I need to do is actually begin to create a plan to migrate those virtual machines so I'll continue to the plan wizard here I'll select the infrastructure mapping I just created and I'll select migrate my development environment from those virtual machines to Rev and then I need to import a CSV file the CSV file is going to contain a list of all the virtual machines that I want to migrate that were there and that's it once I hit create what's going to happen cloud forms is going to begin in an automated fashion shutting down those virtual machines begin converting them taking care of all the minutia that you'd have to do manually it's gonna do that all automatically for me so I don't have to worry about all those manual interactions and no longer do I have to go manually shut them down but it's going to take care of that all for me you can see the migrations kicked off here this is the I've got the my VMs are migrating here and if I go back to the screen here you can see that we're gonna start seeing those shutdown okay awesome but as people want to know more information about this how would they dive deeper into this technology later this week yeah it's a great question so we have a workload portability session in the hybrid cloud on Wednesday if you want to see a presentation that deep dives into this topic and how some of the methodologies to migrate and then on Thursday we actually have a hands-on lab it's the IT optimization VM migration lab that you can check out and as you can see those are shutting down here yeah we see a powering off right now that's fantastic absolutely so if I go back now that's gonna take a while you got to convert all the disks and move them over but we'll notice is previously I had already run one migration of a single application that was a Windows virtual machine running and if I browse over to Red Hat virtualization I can see on the dashboard here I could browse to virtual machines I have migrated that Windows virtual machine and if I open up a tab I can now browse to my Windows virtual machine which is running our wingtip toy store application our sample application here and now my VM has been moved over from Rev to Vita from VMware to Rev and is available for Itamar all right great available to our developers all right Itamar what are you gonna do for us here well James it's great that you can save cost by moving from VMware to reddit virtualization but I want to containerize our application and with container native virtualization I can run my virtual machine on OpenShift like any other container using Huebert a kubernetes operator to run and manage virtual machines let's look at the open ship service catalog you can see we have a new virtualization section here we can import KVM or VMware virtual machines or if there are already loaded we can create new instances of them for the developer to work with just need to give named CPU memory we can do other virtualization parameters and create our virtual machines now let's see how this looks like in the openshift console the cool thing about KVM is virtual machines are just Linux processes so they can act and behave like other open shipped applications we build in more than a decade of virtualization experience with KVM reddit virtualization and OpenStack and can now benefit from kubernetes and open shift to manage and orchestrate our virtual machines since we know this virtual machine this container is actually a virtual machine we can do virtual machine stuff with it like shutdown reboot or open a remote desktop session to it but we can also see this is just a container like any other container in openshift and even though the web application is running inside a Windows virtual machine the developer can still use open shift mechanisms like services and routes let's browse our web application using the OpenShift service it's the same wingtip toys application but this time the virtual machine is running on open shift but we're not done we want to containerize our application since it's a Windows virtual machine we can open a remote desktop session to it we see we have here Visual Studio and an asp.net application let's start container izing by moving the Microsoft sequel server database from running inside the Windows virtual machine to running on Red Hat Enterprise Linux as an open shipped container we'll go back to the open shipped Service Catalog this time we'll go to the database section and just as easily we'll create a sequel server container just need to accept the EULA provide password and choose the Edition we want and create a database and again we can see the sequel server is just another container running on OpenShift now let's take let's find the connection details for our database to keep this simple we'll take the IP address of our database service go back to the web application to visual studio update the IP address in the connection string publish our application and go back to browse it through OpenShift fortunately for us the user experience team heard we're modernizing our application so they pitched in and pushed new icons to use with our containerized database to also modernize the look and feel it's still the same wingtip toys application it's running in a virtual machine on openshift but it's now using a containerized database to recap we saw that we can run virtual machines natively on openshift like any other container based application modernize and mesh them together we containerize the database but we can use the same approach to containerize any part of our application so some items here to deserve repeating one thing you saw is Red Hat Enterprise Linux burning sequel server in a container on open shift and you also saw Windows VM where the dotnet native application also running inside of open ships so tell us what's special about that that seems pretty crazy what you did there exactly burr if we take a look under the hood we can use the kubernetes commands to see the list of our containers in this case the sequel server and the virtual machine containers but since Q Bert is a kubernetes operator we can actually use kubernetes commands like cube Cpl to list our virtual machines and manage our virtual machines like any other entity in kubernetes I love that so there's your crew meta gem oh we can see the kind says virtual machine that is totally awesome now people here are gonna be very excited about what they just saw we're gonna get more information and when will this be coming well you know what can they do to dive in this will be available as part of reddit Cloud suite in tech preview later this year but we are looking for early adopters now so give us a call also come check our deep dive session introducing container native virtualization Thursday 2:00 p.m. awesome that is so incredible so we went from the old to the new from the close to the open the Red Hat way you're gonna be seeing more from our demonstration team that's coming Thursday at 8 a.m. do not be late if you like what you saw this today you're gonna see a lot more of that going forward so we got some really special things in store for you so at this point thank you so much in tomorrow thank you so much you guys are awesome yeah now we have one more special guest a very early adopter of Red Hat Enterprise Linux we've had over a 12-year partnership and relationship with this organization they've been a steadfast Linux and middleware customer for many many years now please extend a warm welcome to Raj China from the Royal Bank of Canada thank you thank you it's great to be here RBC is a large global full-service is back we have the largest bank in Canada top 10 global operate in 30 countries and run five key business segments personal commercial banking investor in Treasury services capital markets wealth management and insurance but honestly unless you're in the banking segment those five business segments that I just mentioned may not mean a lot to you but what you might appreciate is the fact that we've been around in business for over 150 years we started our digital transformation journey about four years ago and we are focused on new and innovative technologies that will help deliver the capabilities and lifestyle our clients are looking for we have a very simple vision and we often refer to it as the digitally enabled bank of the future but as you can appreciate transforming a hundred fifty year old Bank is not easy it certainly does not happen overnight to that end we had a clear unwavering vision a very strong innovation agenda and most importantly a focus towards a flawless execution today in banking business strategy and IT strategy are one in the same they are not two separate things we believe that in order to be the number one bank we have to have the number one tactic there is no question that most of today's innovations happens in the open source community RBC relies on RedHat as a key partner to help us consume these open source innovations in a manner that it meets our enterprise needs RBC was an early adopter of Linux we operate one of the largest footprints of rel in Canada same with tables we had tremendous success in driving cost out of infrastructure by partnering with rahat while at the same time delivering a world-class hosting service to your business over our 12 year partnership Red Hat has proven that they have mastered the art of working closely with the upstream open source community understanding the needs of an enterprise like us in delivering these open source innovations in a manner that we can consume and build upon we are working with red hat to help increase our agility and better leverage public and private cloud offerings we adopted virtualization ansible and containers and are excited about continuing our partnership with Red Hat in this journey throughout this journey we simply cannot replace everything we've had from the past we have to bring forward these investments of the past and improve upon them with new and emerging technologies it is about utilizing emerging technologies but at the same time focusing on the business outcome the business outcome for us is serving our clients and delivering the information that they are looking for whenever they need it and in whatever form factor they're looking for but technology improvements alone are simply not sufficient to do a digital transformation creating the right culture of change and adopting new methodologies is key we introduced agile and DevOps which has boosted the number of adult projects at RBC and increase the frequency at which we do new releases to our mobile app as a matter of fact these methodologies have enabled us to deliver apps over 20x faster than before the other point about around culture that I wanted to mention was we wanted to build an engineering culture an engineering culture is one which rewards curiosity trying new things investing in new technologies and being a leader not necessarily a follower Red Hat has been a critical partner in our journey to date as we adopt elements of open source culture in engineering culture what you seen today about red hearts focus on new technology innovations while never losing sight of helping you bring forward the investments you've already made in the past is something that makes Red Hat unique we are excited to see red arts investment in leadership in open source technologies to help bring the potential of these amazing things together thank you that's great the thing you know seeing going from the old world to the new with automation so you know the things you've seen demonstrated today they're they're they're more sophisticated than any one company could ever have done on their own certainly not by using a proprietary development model because of this it's really easy to see why open source has become the center of gravity for enterprise computing today with all the progress open-source has made we're constantly looking for new ways of accelerating that into our products so we can take that into the enterprise with customers like these that you've met what you've met today now we recently made in addition to the Red Hat family we brought in core OS to the Red Hat family and you know adding core OS has really been our latest move to accelerate that innovation into our products this will help the adoption of open shift container platform even deeper into the enterprise and as we did with the Linux core platform in 2002 this is just exactly what we did with with Linux back then today we're announcing some exciting new technology directions first we'll integrate the benefits of automated operations so for example you'll see dramatic improvements in the automated intelligence about the state of your clusters in OpenShift with the core OS additions also as part of open shift will include a new variant of rel called Red Hat core OS maintaining the consistency of rel farhat for the operation side of the house while allowing for a consumption of over-the-air updates from the kernel to kubernetes later today you'll hear how we are extending automated operations beyond customers and even out to partners all of this starting with the next release of open shift in July now all of this of course will continue in an upstream open source innovation model that includes continuing container linux for the community users today while also evolving the commercial products to bring that innovation out to the enterprise this this combination is really defining the platform of the future everything we've done for the last 16 years since we first brought rel to the commercial market because get has been to get us just to this point hybrid cloud computing is now being deployed multiple times in enterprises every single day all powered by the open source model and powered by the open source model we will continue to redefine the software industry forever no in 2002 with all of you we made Linux the choice for enterprise computing this changed the innovation model forever and I started the session today talking about our prediction of seven years ago on the future being open we've all seen so much happen in those in those seven years we at Red Hat have celebrated our 25th anniversary including 16 years of rel and the enterprise it's now 2018 open hybrid cloud is not only a reality but it is the driving model in enterprise computing today and this hybrid cloud world would not even be possible without Linux as a platform in the open source development model a build around it and while we have think we may have accomplished a lot in that time and we may think we have changed the world a lot we have but I'm telling you the best is yet to come now that Linux and open source software is firmly driving that innovation in the enterprise what we've accomplished today and up till now has just set the stage for us together to change the world once again and just as we did with rel more than 15 years ago with our partners we will make hybrid cloud the default in the enterprise and I will take that bet every single day have a great show and have fun watching the future of computing unfold right in front of your eyes see you later [Applause] [Music] [Music] [Music] [Music] [Music] [Music] [Music] [Music] anytime [Music]

>> Narrator: Live from Las Vegas, it's TheCUBE! Covering IBM Think 2018. Brought to you by IBM. >> Hello everyone I'm John Furrier, we're here inside TheCUBE Studios at Think 2018. We're extracting the scene, even though it's actually our live event coverage leader, covering IBM Think. The big tent event taking six shows down to one. Big tent event. Everyone's here; the customers, developers, all the action. My next guest is Jamie Thomas, General Manager of IBM's Systems Strategy and Development. Good to see you Cube alumni, thanks for coming by. >> Good to see you, it's always one of the highlights of my parts of these meetings is getting a chance to talk with you all about what we're doing. >> We've had, I can't even remember how many, it's like eight years now, but you've been on pretty much every year, giving the update. I was just riffing on the opening about blockchain the innovation sandwich at IBM. I'm calling it the innovation sandwich, that's not what you guys are calling it. It really is about the data, and then blockchain and AI, that's the main thing with Cloud as the foundational element. You're in strategy. Systems. So you have all the underlying enabling technology with IBM and looking at that direction. Part of the innovation sandwich is systems. >> Absolutely, I think it fundamentally what we're seeing is all of the work and innovation we've invested in over the last few years is finally culminating in a really nice conclusion for us, if you will. Because if you look at the trajectory of those forces you spoke about right? Which is how do we harness the power of data? Of course, to harness that data we have to apply techniques like artificial intelligence, machine learning, deep learning to really get the value out of the data. And then we have to underpin that with a multi-cloud architecture. So we really do feel that all the innovations that we've been working on for the last few years are now coming to bear to help our clients solve these problems in really unique ways. >> We've had many conversations, we've gone down in the weeds, we've been under the hood, we've talked about business value. But I think that what I'm seeing and what TheCube is reporting over the past year and more recently is, there's now a clear line of sight for the customers. The interesting thing is the model's flipped around as we've always been seeing, but it's clear, dev ops enabled cloud to be successful where we have a programmable infrastructure. You guys have been doing software defined systems for a long time. But now with blockchain, cryptocurrency and decentralized application developers, you have inefficiencies being disrupted by making things more efficient. We're seeing the business logic be the intellectual property. So users, business users, business decision makers are looking at the business model of token economics. It's kind of at the top of the business stack that have to manage technology now. So the risk is flipped around. It used to be that technology was the risk. Technology purchase, payback period over ten plus years, more longevity to the cycle. Now you've got Agile now going real-time, this requires everything to be programmable. The data's got to be programmable, the systems have to be programmable. What's the IBM solution there? How do you guys fit that formula? Do you agree with it? Your thoughts. >> Well absolutely, I think that fundamentally you have infrastructure that can really meet the needs and characteristics of the next generation killer applications, right? So whether that's blockchain, or whether we're talking about artificial intelligence across numerous industries and every industry is looking at applying those techniques. You have to ensure that you have an architectural approach with your infrastructure that allows you to actually get the result from a client perspective. When we look at the things that we've invested in we're really investing in infrastructure that we feel allow clients to achieve those goals. If you look at what we've done with things like Power9, the ability to create a high speed interconnect with things like GPU acceleration using our partner NVIDIA's technology as an example. Those are really important characteristics of the infrastructure to be able to enable clients to then achieve the goals of something like artificial intelligence. >> What's different for the people that are now getting this, coming in, how do you summarize the past few years of strategy and development around the systems piece? Because systems programming is all about making things smaller, faster, cheaper, Moore's Law. But also having a network effect in supply chains or value chains, blockchain or whatever that is, that's the business side. What's new, how do you talk about that to the first time to someone who's now for the first time going, okay, I get it. It's clear. What's the system equation? How do you explain that to someone? >> Well I think it's a combination of focusing on both economics, but also having a keen eye on where the puck is going. In the world of hardware development, you have to have that understanding at least a year and a half, two years back, to actually culminate in a product offering that can serve the needs at the right time. So I think we've looked at both of those combinations. It's not just about economics. Is is about also being specialized, being able to serve the needs of the next generation of killer applications and therefore the programmers that support those applications. >> What's the big bet that you guys have made? If you could look back of the past three, four years, in the trials and tribulations of storage, compute, cloud, and it's been a lot of zigging and zagging. Not pivoting, because you guys have been innovating. What's the one thing, a few things you can point to, one thing or a few things and saying that was a good bet, that's now fruits coming off the tree in this new equation. >> Well, I think there's a few things and all of these things were done with a context that we believe that artificial intelligence and cloud architectures were here to stay. But if you look at the bets we made around the architecture of Power9, which was really how do we make this the best architecture in the world for artificial intelligence execution? All of those design points, all of the thought about the ecosystem around the partners, OpenPOWER, the connectivity between the GPU and the CPU that I mentioned. All of that and the software stack the investments we've made in things like PowerAI to allow developers to easily use the platform for that have been fundamentally important. Then if you look at what we did in the Z platform, it's really about this notion about pervasive encryption. Allowing developers to use encryption without forethought. Ensuring that performance would always be on. They would not have to change their applications. That's really fundamentally important for applications like blockchain. To be able to have encryption in the cloud, the kind of services we announced yesterday. So these bets of understanding that it's not just about the short term, it's about the long term and this next generation of applications. As we all know, as you and I know, you can't serve those kind of applications without having an understanding of the data map. How are you going to manage the just huge amounts of data that these organizations are dealing with? So our investments, for years now, in software defined storage, our Spectrum Storage family, and our Flash have served us well. Because now we have the mechanisms, if you will, at our fingertips to manage storage and data in these multi-cloud architectures as well as improve data latency. Access to data through the things we've done. >> So the performance is critical there? >> Yeah, absolutely, the things we've done with Flash, and the things we've done with our high end storage with the mainframe, the zHyperlink capability we've built in there between the KEK and the storage device, those are really, really important in this new world order of these kinds of next generation applications. >> Yeah, skating where the puck is is great and then sometimes you're just near there and the puck comes to you, however, whatever way you want to look at it. Take a minute to explain your role now, what specifically does systems mean? Where does it begin and where does it stop? You mentioned software stack, software defined storage, we get that piece. What's the system portfolio look like? >> We're focused on the modern infrastructure of the future. And of course that infrastructure involves hardware. It involves systems and storage. But it also fundamentally involves infrastructure-related hardware, software stacks. So we own and manage critical software stacks. The creation of things like PowerAI that work with the IBM Cloud team to ensure that IBM Cloud Private can support our platforms, Power and Z out of the box. Those are all fundamentally important initiatives. We of course still own all of the operating systems everybody loves, whether it's Linux, AIX, Z/OS, as well as the work around all the transactional systems. But first and foremost, there's a really tight tie as we all know, between hardware and then the software that needs to be brought to bear to execute against that hardware, the two have to be together, right? >> What about R&D? What's the priority on R&D? It's the continuation of some of the things you just mentioned, but is there anything on the radar that you can share in R&D that's worth noting? >> Well I think, clearly we're working on the next evolution of these systems already. The next series of Power9's we have new machines rolling out this month from a Power9 perspective. We're always working on the next generation of the mainframe of course. But I'd say that our project that's gotten a lot of note at the conferences is our Quantum project. So IBM Systems is partnering with IBM Research to create the Quantum computer. That would be the most leading edge effort that we have going on right now, so that's pretty exciting. >> Yeah, and that's always good stuff coming out. Smaller, how big is this Quantum, can you put it on your finger? Was that the big news? A lot of great action there. >> Well the Quantum computer is a very different form factor. It's truly an evolutionary, revolutionary event, if you will, from a hardware perspective, right? Because the qubit itself has to run at absolute zero. So it has to run in a very cold environment. And then we speak to it through a wave-based communications, if you will, coming in from an electronic stack. It's fundamentally a huge change in hardware architecture. >> What's that going to enable for the folks watching? Is it more throughput? More data? New things, what kind of enablement do you guys envision? >> Well first of all the Quantum computer will never replace classical computers because they're very different in terms of what they can process. There's many problems today in the world that are really not solvable. Problems around chemistry, material science, molecular modeling. There's certainly certain financial equations that really are processable but not processable in the right amount of time. So when you look at what we can do with Quantum, I think there will be problems that we can solve today that we can't even solve. As well as it will be an accelerator to a lot of the existing traditional systems if you will, to allow us to accelerate certain operations. If we think about the creation of more intelligent training models for instance, to apply against artificial intelligence problems, we could anticipate that the Quantum computer could help speed up the evolution and development of these models. There is a lot of interest in working on this evolution of hardware because it's somewhat like the 1940's era of the mainframe. We're at the very beginning stages and we all know that when we evolve the mainframe it was through significant partnerships. Helping the man get to the moon. Working with airlines on the airline's reservation system. It was these partnerships that really enabled us to understand what the power of the machine could be. I think it will be the same way with Quantum as we work with our partners on that endeavor. >> Talk about the, because performance is critical, and you know blockchain has been criticized as having performance problems, writing to the chain, if you will. So clearly there's a problem opportunity basis you can work on there. What are the problems in blockchain, is that your area? Do you work on that? Are you vectoring into blockchain? >> Well of course we're very involved in the blockchain efforts because IBM secure blockchain is running on our z14 processor. One of the things we want to take advantage there is not only the performance of the system, but also, once again, the security characteristics. The ability to just encrypt on the fly. The exploitation of the fast encryption, the cryptology module, all of that, is really key fundamental in our journey on blockchain. I also think that we have a unique perspective in IBM on blockchain because we're a consumer of blockchain. We're already using it in our CFO office. I've spoken to you guys before about supply chains, I own the supply chain manufacturing for IBM and we're also running a shadow process for blockchain where we're working on customs declarations just like Maersk was talking about yesterday. Because customs declarations is a very difficult process. Very manual, labor intensive, a lot of paper. So we're doing that as well, and we'll be a test case for IBM's blockchain work. >> And I've heard from last night that you have 100 customers already. You've heard my opening, I was ranting on the opportunity that blockchain has which is to take away inefficiencies. And supply chain, you guys no stranger to supply chain, you've been bringing technology to solve supply chain problems for generations at IBM. Blockchain brings a new opportunity. >> It does, and my team fundamentally realizes this of course, as a supply chain organization. We ship over five million pieces of stuff every year. We're shipping into 170 countries. We have a tight but dispersed manufacturing operations, so we see this everyday. We have to ship products into every country in the world. We have to work with a very dispersed network through our partners of logistics. So we see the opportunity in blockchain for things like customs declarations as a first priority, but obviously, the logistics network, there's just huge opportunities here where far too much of this is really done manually. >> You guys could really run the table on this area. I mean blockchain, supply chain, chain I mean similar concept it's just decentralized and distributed. >> Well I think supply chain is such an area ripe for this kind of application. Something that's really going to breakthrough what has been so labor intensive from a manual perspective. Even if you look at how ports are managed and Maersk talked about that yesterday. >> So you're long on blockchain? >> Well, I'm excited about it because I'm a customer of blockchain. I see the issues that occur in supply chains everyday and I fundamentally think it will be a game changer. >> Yeah, I'm biased, I mean we're trying to move our media business to the blockchain because everything's decentralized. I'm excited about the application developer movement that's starting now. You're starting to see with crytocurrency, token economics come into play around the business model innovations. Do you guys talk about that internally when you do R&D? You have to cross-connect the business model logic token economics with the technology? >> Well of course you know that's a fundamental part of what the blockchain focus on right? It's just like any new project that we embarked on. You've got to get the underlying technology right but you've always have to do that in the context of the business execution, the business deployment. So we're learning from all the engagements we're doing. And then that shapes the direction that we take the underlying technology into. >> Jamie, talk about the IBM Think 2018, it's a big event. I mean you can't multiply yourself times six. You go to all the events. This is a big event. You must be super busy. What's the focus? What's your reaction, what have you been talking about? >> Well it's kind of nice to talk to you kind of towards the end of the event. Sometimes I talk to you guys at the very beginning of the event so they all kind of have a retrospective of the things that have happened. I think it was a great event in terms of showcasing our innovation, but also having a number of key CEO's from various firms talk to us about how they're really using this technology. Great examples from RBC, from Maersk, from Verizon, from the NVIDIA CEO yesterday. And also some really pointed discussions around looking into the future. So we had a research talk about, Arvind Krishna spoke about, the next five big plays. Which are artificial intelligence, blockchain, Quantum were on that list certainly. As well as now we'll be having a Quantum keynote later today so we'll dive into Quantum a little bit more in terms of how the future will be shaped by that technology. But I think it was a nice mix of hearing about the realization of deploying some of the things that we've done in IBM, but combined with where are things going and stimulating thought with the client which is always important in these kind of meetings. It is having that strategic discussion about how we can really partner with them. >> Real conversations. >> Yeah, real conversations about how we can partner with them to be successful as they leave this conference and go back to their home offices. >> Well congratulations on a great strategy, you've been running strategy. I know we've talked in the past. You've kind of had to bring it all together into one package, into one message, but still have the ability and flexibility to manage the tech. So my final question for you is where's the puck going next? Where are you skating now strategy wise to catch that next puck? >> Well I think that what we'll see is a continued progression, if you will, and speed around some of the things that we've already talked about here. I think there's been a lot of discussion for instance, around multi-cloud architectures. But I really think we're still at the tip of the spear in fundamentally getting the value out of those architectures. That real deployment of some of those architectures as clients modernize their applications and really take advantage of Cloud, I think will drive a different utilization of storage, and it will require different characteristics out of our systems as we go forward. So I think that we're at the tip of a journey here that will inform us. >> The modernization and business model innovation, technology enablement all coming together. >> Right, we were talking about that right? So think about the primary use case of IBM Cloud Private right now is modernization of those applications. So as those clients modernize those applications and then start to deploy these new techniques in combination with that; around artificial intelligence and blockchain, there's just a huge opportunity for us to continue this infrastructure innovation journey. >> International Business Machines. The name of the company obviously, and you know my opinion on this, we're reporting that the real critical intellectual property for customers is going to be the business innovation, the business model opportunities in blockchain, AI, really accelerate that piece. >> And as Ginni said yesterday, we're here to serve our clients, to make sure that they're successful in moving from where they have been and the continuation of this journey. And so that will be where we keep our focus as we go forward. >> Well looking forward to talking about token economics. I think that's going to be a continued conversation as you guys create more speed, more performance, the business model innovations around token economics. And then decentralized application developers will probably impact IoT, will probably impact a lot of these fringe, emerging, use cases that need compute, that need power. They need network effect, they need data. >> Absolutely, so I mean there's been a lot of discussion this week about making sure that we move the processing to the data, not the data to the processing because obviously you can't move all that data around. That's why I think these and Fungible architecture and Agile architecture will give clients the ability to do that more effectively. And as you said, we always have to worry about those developers. We have to make sure that they have the modern tools and techniques that allow them to move with speed and still take advantage of a lot of those. >> And educate the business users . >> Exactly, exactly. >> Are you having fun? >> I'm having great fun, this has been a great conference. It's always great to talk with you guys. >> We really appreciate your friendship and always coming on TheCube and sharing your insights. Always great to get the data out there. Again, we're data driven, this data driven interview with Jamie Thomas, General Manager of System Strategy and Development here at IBM Think inside TheCube studios we're on the floor here in Las Vegas. I'm John Furrier. We'll be back with more after this short break.

>> Announcer: Live from Las Vegas. It's theCube. Covering IBM Think 2018. Brought to you by IBM. >> We're back, IBM Think 2018. This is theCube, the leader in live tech coverage. My name is Dave Vellante and I'm here with my co-host, Peter Burris. We're talking all things cloud, AI, blockchain, quantum, information management, information architectures. And we're here going to talk about resiliency. Business resiliency. Pat Corcoran is the IBM business resiliency global strategy executive. Doctor Larry Ponemon Is here, he's the head of the Ponemon Institute. Gentlemen, welcome to theCube. >> Thank you. >> Thank you very much. >> Alright Pat, set it up for us. What's going on here, at Think generally and then specifically, talk about business resiliency and what it means. >> Well for I think at Think this year, resiliency, we're teamed up with security. Because a lot of synergy when you look at resiliency where you want to be adaptable, flexible, companies want to be able to adjust to situations quickly. The environment's changed, where in the past when you looked at recovery and resiliency, people thought about natural disasters but now, this past year, it's been on longer, but the past year we've all seen a lot of major cyber-events. So now resiliency has taken on a different view. Different approach. Because it's not just the risk of a hardware problem, or a site going down. Now we got to address risk from a cyber and it's a totally different risk. So at this conference, we've teamed up with security at IBM to try to present an integrated package, integrated approach, and we're also working with Larry, sharing some results from a study from last year, about the cost of data breach, and the importance of business continuity, to cyberattacks. Because most people today, they're not ready. They might look at protect, they might look at detect, but they're not, they don't know how to recover from a cyber and that's what we're addressing here today. >> So Larry, we're going to get into the study but what's the Ponemon Institute? Why did you start it almost 20 years ago? Give us the background there. >> So the Ponemon Institute is a research company and we're linearly focused on cybersecurity, data protection, privacy, and other related topics. The reason why we started the institute, my background is varied intelligence and security over a very long period of time. I hate to admit it, but over 45 years of experience. And the bottom line is we saw a real need for information. The decision-makers needed to know, what are the really significant issues in privacy or information security, that could affect their organizations. And we're very lucky, we chose an industry that was interesting and profitable, and every day there's a new issue. So you never run out of research ideas. >> Amazing, I mean the last 12 months has been, it seems like this is a game of escalation >> Larry: Oh, it's crazy. >> You put on the TV and see NBC and all of a sudden there's you know every board of directors from a credit bureau on there, big words, "breach" across the bottom. >> Data breach. That's just a nightmare, right. But every day, there's something in the news. And to your point, Pat. It just seems to be getting more and more costly to businesses. >> It is more costly, and I think now when you look at annual reports, when I go visit a customer I like to read their annual reports, and the CEO or the CFO put down what risk are they concerned about. Almost every annual report now has cyberattacks in there. Because they have to, they have to be aware of it. And it's gotten so bad now. But like you said, the challenge is, a hacker only has to be successful once. Companies have to be successful hundreds, thousands, millions of times. Stopping these people from getting in and that's what we're trying to help them stop. >> Black hats is a growth business. >> Well it's a game for them. It is a game and they're good at it but we have to be better and that's the hard challenge. >> But virtually every company has been breached. It's like, the NBA I don't think any team has ever gone undefeated in the NBA. Despite your hope for the Warriors. (laughing) It just can't be done. So Larry, let's get into the study. You've done this for a number of years. >> Oh yeah. >> Dave: You've seen the patterns. What do we need to know? >> Yeah we know that the cost of a data breach is very significant. You know, you basically talk to CEOS and board members and you say, "What's the cost of a data breach?" And you get that glazey-eyed like, "How do we know?" But we've been trying to benchmark and figure out what that true cost is. And it could be millions, tens of millions of dollars your organization, just recovering from the major data breach. Let alone lose customer trust, and along there are huge long-term consequences. Across the data breach study, sponsored by IBM, we've done this analysis globally, and now we do it in 13 countries, and this current year it's going to be 15 countries, we're adding two new countries. And the issues, even though there are cultural differences and geolocation differences, companies are companies and all companies around the world are dealing with this phenomenon. And as Pat said, bad guys are getting worse, or better if you're on the side of evil, and their ability to get data and use data against organizations creates a huge challenge for organizations. And that's where actually you need IBM. You need the right technology, you need the right tools, the right personnel, to get the job done right. >> So I mean at the simplest level, the cost of a breach seems like it would be a function of the probability of that breach times its impact. And so, what are you seeing in terms of those variables? Are breaches happening more often, is the business impact greater, are they both sort of proportional? What's the relationship? >> The cost is climbing, globally. What we find is that organizations are ill-prepared to deal with these problems. We also know that a lot of organizations don't have the internal talent, the people they need to be able to identify and respond to these problems quickly. Our findings show that organizations that are using leading-edge technologies, and involve their BCMs, their business continuity people, are much more likely to have a successful outcome. But it's a mess right now honestly and there isn't an organization out there that isn't subject to a major data breach. >> Pat, when you talk to clients, to Larry's point, you ask them do you know what the cost of a breach is? The vast majority presumably don't. Do you help them sort of quantify that? Look at the business impact? >> We can. And that's a great point. They don't know. And they haven't looked at it. One of the challenges is, in many cases the security arm, the recovery arm and the continuity arm, more people, they're all fragmented. They're run by different groups within the company. So we want to work with companies to bring them together and so we can do an impact, business impact analysis, and look at what types of risk are you most concerned about. How vulnerable are you to those risks? And what would be the impacts? Tangible and intangible. Towards your brand. You look at some of the names that have been in the papers. You're in the paper and you're there for day after day because you're down for weeks. Your brand is being impacted. So that's an intangible cost, but is a significant cost. So we do help you with an assessment. >> So Larry, Dave mentioned that you've done this for multiple years. Last years' studies show that the improvements on time to identify and time to contain, was about 5% over what had been the previous year. Still not great, but it's getting better. Are we seeing this kind of five percent per year slog? And what do we need to do to start accelerating the rate of improvement? >> Right, so the word slog is appropriate. It's a slow-moving train and you get organizations to make a small improvement and that leads to, in the long term, really good outcomes. But unfortunately, it could go the other way. The bad guys are getting very talented and so they'll see opportunities, windows to exploit organizations and they want to hide their, they don't want the world to know that they've committed a crime. So the time to identify and time to contain may kind of move in the opposite direction. But in general we are seeing small improvement. One way that organizations are improving is they're involving other experts, other teams, so it's no longer just an IT security problem, Or a compliance issue, it's more than that. As Pat mentioned, it's a brand issue and bringing other people to the process is greater and greater visions. >> Allow me to repeat that this is people too. Because this isn't an IT issue, this is a business issue. >> Well, we've done some work on this and thinking, but what's the right regime for cybersecurity? It's not just the SISO problem or an IT problem but what percent, well first of all, first question. What percent of organizations, and I'm not just talking about large organizations, think about your client base, what percent actually look at cyber as a board-level issue. Obviously RBC Today, Verizon, yes it's a board-level for those high-profile companies but across the board, is it 100%? >> Pat: Not even close. >> You just did a recent study I think, that looked at that right? >> Yeah we basically saw board-level involvement, you know do you view something as strategic or simply tactical? It's about 39% on the side of, yeah we do, and then the remainder they do not. And that's an inflated number, because when you ask people on a survey they have a halo effect. You're more likely to say, oh sure we do that. Sure we get our board and CEOs involved. It's again that slog word. It's a slow-moving train but we're seeing more and more boards getting involved. Also it helps that some of the new regulations that are coming down the pipe. There's a new regulation in New York State that requires the boards of directors to sign off if they have had conversations with SISO and they've identified the appropriate risk issues. So it's definitely moving in the right direction but it's slow. >> So I had a conversation with a Chief Privacy Officer client, a couple of months ago. And she told me that they'd calculated what would have happened with the Equifax breach, if it had been subject to the fines that are going to go into effect over in Europe. And she said that Equifax would have been hit with $160 billion, with a B, dollar fine. >> Larry: Wow. >> Is that the type of exposure that we're really talking about here for companies that are not doing a good job of, especially given some of the new regulations on the rise. >> Oh absolutely, you know just today there was this issue with Facebook, you probably were following that issue, where Facebook-- >> Oh really, who's Facebook? >> I don't know, they're a small social media company. But basically they released information profiles, detailed profiles, on individuals, and I think it was like 25 million, something towards that range. If the GDPR was in effect, and it involved European citizens, they would put them out of business. There would be no way they could operate in Europe. It would be hundreds of billions of dollars. So it could be devastating, and compliance is on the move, there's no question that Europe is going to be very tough on US companies that are not complying with their law. >> One of the things that Peter and I learned when we started talking to SISOs and boards of directors about this, was that part of the business resiliency strategy was response. That they sort of knew they were going to get hacked, they've been hacked, instead of telling the board no, we've got it all covered, they say listen, this has happened, it's going to happen again, way more transparent. We're going to focus not only on keeping the bad guys out, but How we can respond better. >> Contain it. >> Containment and response. In a more productive manner. How does that fit into your strategy? >> I'll say it's from a recovery. When you talk about respond it's recovery. And one I think you have to look at the company, you have to help the companies and they have to look across the total enterprise. I call it a domino factory. When you get hacked, or when when some risk impacts your business, it creates another risk. It's a domino effect and a lot of companies don't look at it that way. They look at why we get hacked, what does that mean? They have to sit down and really understand what it means to the business and what could happen after, what could it create? And there's a lot of unknowns there. We're gaining a lot more knowledge here, but you really have to sit down and look at it. So the executive committee team, at the board level, they have to be committed to this responses. From a resilience-recovery standpoint, they haven't looked at it as strong as they should of in the past, but I think this past year because executives are being held accountable, they're losing their jobs or going to jail, and so now they're coming out asking for our guidance. They're asking for help. And so the recovery piece, we're looking at new ways of trying to protect, find ways to protect your data. And when that data's protected, can we figure out is something changed? Like when a hacker gets in they make a change, they go in it through your configuration information, no one looked at that typically. So we're trying to find ways to monitor and track, detect these things when they happen, so that we can then figure out how far back you can go back in the data, because the data, was it corrupted today, yesterday, five months ago? It's not an easy solution but they've got to be committed, they've got to sit down we've got to work together to help them figure out the best approach. And there's not one answer. >> Larry I noticed you haven't thrown out the fear metric. You see this a lot, which is "The average cost "of a data breach is 2.56783 million per second." Or whatever it is. Now is that because you don't believe in that, and every situation is different, it depends on your market value, what type of data, et cetera, et cetera. Or is it because it's just too hard to actually quantify? I wonder if you could comment. >> We actually do, some of our research we attempt to quantify, we use activity-based cost data. I only told my friends this, but actually I'm a CPA and a PhD in Accounting, so I know accounting pretty well, and we used an accounting method to try to figure out what the total cost is. It's not a perfect measure, but it basically is fairly objective, and it's the best that exists. Not to sound egotistical, but I think we're the best in that narrow space of predicting cost. But it is difficult because it does depend on a lot of variables. And a lot of organizations don't necessarily understand all of the different ways that a bad event, a negative, a significant breach could affect the bottom line. But we talk to clients and organizations about it, we do board retreats, I was telling Pat, it seems pretty popular, the board wants to get a new-found religion, in privacy and security, after they experience a disaster and we work with them to try to educate them on these risk issues that Pat was referring to before. But it's an interesting time to be in this business. Lots of change. >> Well, in the context of data breaches, I mean, you've pointed this out a lot Peter, is people don't really have an understanding of the value of their data, there's no accepted accounting, there's no gap for data. >> One of the worst circumstances is there's a huge information asymmetry. The bad guys know how valuable your data is. You don't. >> It's the new currency. If you think about currency, data is a currency for people. For companies. An when you lose it, it's one of your most, after your people, your currency's your most critical asset. >> We say the difference between business and digital business is data. Otherwise they're the same thing. A digital business, organizes, treats its data as an asset. But it is a problem that the bad guys are willing to invest more money, more time, more innovation, into attacking because they seem to have a better understanding of what the real value of data is, than the good guys. And that's a problem. >> It's a huge problem. You know we see all of our trade secrets, for example, economic espionage is on the rise. The nation states, they're enjoying this, it's so easy for them to collect incredibly valuable information that we don't even know that it's out in the hands of countries. Not even competitors, worse than that. But if things, fortunately there's a lot of FUD, there's a lot of fear, uncertainty and doubt, but there are really great things going on, in theory of inventing new security controls. That's why I turn to IBM, they're where I go to deal with these issues. >> So if I can ask one last question. Larry, what do you need to do to get people to acknowledge and properly place the value of their data? Is there anything we can do, like in the next six months? >> Yeah I mean I think really the bottom line is, you need to get your senior executives to see this as a strategic, not just at tactical issue. And they could start immediately. I think doing a study for an organization, there's nothing we can do, but others can do this very well. To try to show the economic impact to an organization, especially one that's undergoing a digital transformation. That's, as you mentioned, that's where the value of an information asset, is just so incredibly high. And then you look at a company like a social media company, like a Facebook, and as you basically said, >> you should know. >> Yeah, you should know. So there are examples that you can turn to to show the value of the data asset. It's not protected very well, what are the consequences, downside consequences. >> Well we've got to wrap it up. We talked about sort of Facebook peripherally, but the weaponization of social media is becoming a huge, huge problem. It's certainly affected by most accounts last election, 2020 is going to be all about, Facebook is more influential than the UN. And even though we're here talking about business, everybody in business is on social media, or at least increasingly. And that's another way in. >> It is. >> Give you the last word. >> You know, as Larry said the data's critical, and I think it starts at the executive level, they have to understand the value. And we do this, I just presented about it, we talk about an assessment because, how do you get their attention? You don't want their attention once you get in the headlines, you want help demonstrating there's a value here. So using a study, and Larry did with us, using some assessments that tries to say, here's where you're mature and here's where you're not. For business and IT. To help people demonstrate the importance of this. And demonstrate the risk and vulnerabilities in it. I think that's what people have to, they have to raise, elevate that discussion and make people understand the real business impact. >> Alright, working through day two here IBM Think 2017, you're watching theCube. Dave Vellante for Peter Burris. Check out siliconangle.com for all the news, thecube.net is where you find these videos and wikibon.com for the research. Pat and Larry, thanks very much for coming on. >> Thank you. >> Alright keep it right there, we'll be right back with our next guest right after this short break. (bright music)

>> Announcer: Live from Las Vegas, it's TheCUBE! Covering IBM Think 2018. Brought to you by IBM. >> Welcome back to Las Vegas, everybody. IBM Think, the inaugural IBM Think. This is TheCUBE, the leader in live tech coverage. My name is Dave Vellante, and I'm here with Ed Walsh, the general manager of IBM Storage. Ed, always a pleasure, my friend. Good to see you again. >> As always, great. >> Wow, what a show! >> It's amazing, it's fantastic. >> 30,000, 40,000, I don't know. I said to John, too many people to count! >> Hard to get through places, right? Just to get here, it was hard to get here. >> We're going to get into your business. You're not a newbie anymore. >> Ed: 18 months, right? >> Second time at IBM, so you really know the ropes. But let's start off with Ginni's talk. You heard our riff, John and myself at the talk. I really like her style. I was poking at some things, but what was your take on her message to the audience? >> Well, just consistency. As an outsider from IBM, the power of IBM to actually change the environment's pretty good, but putting smarter to work and really focusing on business is where we're core. I think it's powerful, but also it allows you to have the overall message of IBM come in, innovative technology. Now, we're going to talk about data and cloud, but innovative technology, an industry split on things, and then, really, the trust and security piece, that comes together. Now, when we talk about it, how do we in the data area move people forward? I think it's a powerful message of, I heard your earlier statement about that, the power of the incumbent. If you look at this, global 2,000 clients that we deal with are looking to user data and to more aggressively advance themselves, and that's where we're perfectly positioned. Even as storage, and we'll get back to storage in a second. But it all comes back to data, which I can include storage, but it's leveraging the data for the competitive advantage and doing what they maybe were slow to do. The early phase one of the data era was really the consumer companies really taking over. We'll talk about good tech versus bad tech. Really, now, we believe it's the rise of the incumbent, which you messaged pretty well, because they do have all this data. Maybe they're slow to adopt how to use that data. With the right partnership at IBM, we can do that. And that's where we're getting the most traction for the clients is telling them, "How do you actually get data-driven in your business?" "It's not as easy as you want it to be." It is about technology, but it's also about human capital as well. >> You obviously talk to a lot of customers. You have for years on both sides of the fence. You've been talking to customers about disrupting companies like IBM, and now you're a part of IBM, and you're helping the incumbents not get disrupted, and maybe be the disruptors, as Ginni was saying. The reason why I was poking at that a little bit is because it is all about the data, and if you, I mentioned yesterday, look at the five top companies in the US in terms of market cap. $600 billion, $700 billion companies. We know who they are. They're the Amazons, the Facebooks, the Googles, et cetera. The premise that I have is they have data at the core of their business, and they've organized human, human expertise around that data, whereas historically, I was talking to Peter Burris about this the other day, he said, "Historically, people have organized humans "around their assets," which might be plant equipment, it might be the bottling factory or whatever it is. So, how do companies go from that distributed, bespoke, siloed data model into this core data model? That's a cultural change, it's a technology change, it's a people and process change. What are you seeing, now, we saw some examples today. RBC, we saw Maersk, we saw Verizon, I'm a little more skeptical on Verizon. Big telcos have a lot of infrastructure that's unchanged, but what are you seeing with companies, how receptive are they? Are they sort of sidecaring their digital transformation, or are they jamming it right through the center, the heart of the company? >> Everyone's on a different maturity curve for sure. We see the leaders and the laggers, right, and the people in between. But everyone desperately wants to do it, so we spend a lot of time saying with our clients, "Let me show you how others are getting more data-driven." On-prem, we focus a lot on private clouds in my division, but also how that's multi-cloud in nature. Because you do have to look at the overall environment and how to look at it, and everyone has their own vision about how they're going to go from where they are to where they need to get to. To get them there in the right steps takes, actually, the girth of an IBM with our technology, with our consultant, our capability to do that. It does take innovative technology, but to get clients is really sharing, really, we see three patterns on-premises are people leveraging to get to multi-cloud. But really, how do they modernize and transform their current environment to do it? We spend a lot of time explaining what other people are doing so that they're, 'cause some of 'em are laggers. Everyone wants to be data-driven. They've tried different areas, and now, how do we make it easier to do that? We're also making investments to make it easier to do that. Little things like machine learning, deep learning. That can be hard stuff. You can wrestle with a lot of the tools and building models. We're doing simple things like, Power AI would be example, in the environment where we bring these open-source tools and make it very easy for you to get your team to start focusing on business value, not the technology components. That's just making it easier, allowing, maybe you'd say the slower, right? Phase one is largely consumer disruptors disrupting it, 'cause they're moving just much faster than maybe the incumbent was. But we can make the incumbent get nimble, which they can with the right technology, but also, it's human capital as well, we can get there. We're doing a lot, not only in the infrastructure side, but you can do in public cloud, by private cloud, but leveraging that system record data is kind of hard, so it's all about tools and being more agile. But also, it's about making it really simple to do some complex things. I gave you the AI. I'll give you another one. People want to do app modernization there on native cloud apps. They want to refactor applications. They want to go to containers and microservices. Yeah, so, and how's that going? And they'll say it's pretty hard. So what do we do? We come out with IBM Cloud Private. What is that? Well, we've taken the challenge out of putting all these tools together. They said Docker, Kubernetes, Cloud Foundry, but also our operational layer to make it easy for you to deploy that, and then now you have complete portability between different clouds, multi-clouds, including IBM's cloud. But you can do it on-prem as well. But now what you can do is you're not focusing on getting all the components together. You're driving your value, which is where, typically, all these things, they focus so much on building a data lake and actually getting, how do I get the data lake up and running, compared to, how do I actually make sure I'm doing the right data, the right business? That's where I think you're seeing IBM focus a lot of innovation. It might not seem like, you know, that doesn't sound like storage to me, right? But it allows us to help our clients move forward, and those are the things holding them back. Storage is about having API-based automation, which, you're not thinking about storage that way, but you need to do it to fit in to this new world. You're going to see us do more and more. When you talk about putting smarter to work, we're trying to make it dramatically easier to get value, even for the incumbent. Which, maybe you could say they were slower, they don't have the right skills, or they have to do some things. I think we're going out of our way to build the right things. >> Well, my takeaway is, you're allowing the incumbents to get value out of their existing advantages, and their existing, I've talked about app modernization. They're making a lot of money on those apps, and if they can modernize, they can use that as a competitive weapon. I want to talk about your business. People that don't know you, you've done a bunch of startups, you kind of had the Midas touch. You're a technologist. You really understand deep technology. I'm told you're a tough boss, but a fair boss, so you're demanding. You know what it takes to win. IBM Storage, four consecutive quarters of growth, and not just 0.05 % growth, you're talking about substantial, meaningful, high single digits, mid single digits, and the market's growing at whatever, 2%, 3%. You're gaining share in a very large market. Give us the update on your business. How are you doing it? >> You nailed it. A lot of people highlight after years of not keeping with market, we went for not only growing, but we grow in all four quarters. But more importantly, we grow 7% year to year, which the market's grown about 0.9%. But it's really, it's also broad-based. It wasn't a particular product. If you look at our portfolio, every report segment we have internally, externally, grew for the year. If you look at geographies, six out of seven geographies grew. The only geography that didn't grow for us was China, and it's growing in software, it's just not growing in hardware because of some of the unique instances dealing with business in China. But if you look at broad-based, it's not a particular thing. Our portfolio's doing well. It's really how we're approaching the customer, and it's resonating with clients. Then it pulls together the whole portfolio. We have the broadest portfolio, which, you know, we talked about early on. Are you going to simplify that, or is it too much? I actually think it's an advantage, 'cause if you're trying to help people, and this is where the advantage is. All our clients are challenged. We talk about being data-driven. Now, that's a big challenge. But also, they're challenged with budgets and other things for efficiency. How do you get from where you are, where you need to get to, and then make the right steps? You need a broad portfolio to do that. I think the biggest value is we help people get more data-driven. A lot of that is showing what other people are doing walking forward, and it's very into modernizing and having the right agility in the infrastructure. But that's where it's really resonating with the market. And then we're focusing on offerings. We probably have the most competitive offerings. We have hardware and software, but also, the right go-to-market. How do you have the right messaging? We talked more about modernizing, transforming, helping clients free up critical dollars for resources so they can transform and do that in a concrete way. That's what you need to do so that you connect, you transform. And then we help 'em with the data, how to be truly data-driven. That message really plays because all of our clients, big and small, are just challenged that way. What our competitors are, to be honest, more pure storage players, I think I've told you a couple times, the reason I'm happy to be here is, you think of what IBM, when it shows up, can do to help you. I think storage and helping people into the next data-driven era is a big boy/big girl game. You have to bring a lot to bear. We're going to talk about analytics, machine learning, different tool sets. It's not about the next array, but underneath my portfolio, we'll go toe-to-toe with everyone product by product. That was just a lot of offering-by-offering work that had to be done, but we're in much better shape now, and then you're going to see continued innovation through this year. >> Well, I have to bring in the competition, 'cause you're stealing share from the competition. If I'm hearing you correctly, you're saying, Joe Tucci used to say, "We'd rather have overlap than gaps." That's a philosophy that you seem to be taking. EMC now under Dell's ownership taking a different philosophy. They seem to be consolidating their portfolios, they seem to be going for more volume plays, which is consistent with how Dell would operate. I wonder if you could compare and contrast those two philosophies. Am I right that you'd rather have a broad portfolio with no gaps than have gaps and not being able to meet market demand? Is that fair? >> Yeah, I think you'll see us be disciplined in portfolio. But my point is, someone's really trying to, you're trying to really help someone get from A to B in their environment. One product doesn't do it. A couple products don't do it. You do need the full solution set to do it. I also think it's not only what we can do with storage, what we can do with systems. You talk about data-driven. I bring in the overall group. Analytics, we're number one in analytics, et cetera. That's where you start to get, where we show up, it's a different value proposition. That's where we're winning. Now, we also still get involved with, hey, I'm going to, it's U-verse, EMC, array-by-array, winner takes all. We do that all the time, and we'll stand by every product. But you said it, well, you used Tucci. Conversation with Tucci has been reported, but he said to me, which was, "What do you fear most is, "if IBM ever got their act together," he said, "It'd be scary." All we're basically doing is getting IBM's act together, and then from clients are responding to it because they're actually getting a bigger value. That's changing some of our relationship with the clients because they still want to focus on this product and that product. But I think that's really what's affecting the change and the overall business direction. >> Well, getting your act together involved a lot of blocking and tackling, and still does, I'm sure, but it also involved a focused effort on taking R&D, pinpointing that on what the clients needed, getting products out. I mean, when we first did TheCUBE with you guys years ago, it was hard to see a rapid cycle of new product innovation coming out. My sense is that that's changed. I see more announcements, I see a lot more announcements. That makes products that people can buy, it drives revenue, it drives transactions. It brings partnerships. Is that a fair assessment of what you guys have done? >> It comes back to team. We'll go to the high-level team offering at go-to-market, but if you don't have the right team, so, basically, the first thing you do, you have to get the right team. The right team will make the right call. I built Insight IBM. The team I have now is not the team I started with, but it's really getting the right people that are knowing their business cold, inside, outside, that know storage, that can really drive that. The decisions become pretty easy. You got to have the right vision. The vision's all about having a dynamic vision that people understand and can give feedback to, and it does outside-in. It's what's going on with the customers that really matter to us. But get everyone around that, you have an open culture that that feedback loop down to every IBMer, right? You need to ignite the IBMer, I'm talking about, like, a third party, but it really, it's an amazing culture that if you give them the right direction, they'll drive for walls. It was probably my easiest turnaround I've ever done with the right vision. Also, at this-sized companies, a lot about having very agile operation. I spent a lot of time on things that you're not going to talk about on TheCUBE, but what we're doing with costs and quality, all the different things we're doing in serviceability that really do show up as far as NPS. We do a lot of things on a net promoter score, or every time we sell something or service something, we're getting feedback from clients, and they're filling in these verbatims. Boy, that is rich information that is going directly in a, I can give you a couple examples, goes directly into it. What we did is, one of our products is Spectrum Protect. Again, I'm not going to try to go to, but might as well. One particular offering that I have is a great offering, but it's been around for a long time. TSM turned to Spectrum Protect. Verbatims from clients, "I just need and it was simplicity, agent, listen," and they came up with three or four different things that had to be done on a particular environment. So, guess what? We deliver that, and literally, do this, get that. You listen to clients, we deliver that with quality. You put it as part of the overall Spectrum Protect, all of a sudden, transaction revenue goes up by 6%, which is a big revenue stream to just pop in a very single quarter. We're going to do that, but that's like an offering by offering work that has to be done, and you have to have the right team to do it. I would say the credit goes to the team, and the IBM team that really responded to it and lifted it. >> I mean, 10 years ago, that would've taken a year and a half or more to actually get into the product flow, right? >> It's fast. >> Okay, but the other thing I would observe, I've been hearing from companies like yours for decades that, "Well, we're going to use the adjacencies in our other business "to compete with the leaders." And it's never happened. It's starting to happen now, and presumably because people don't care as much about the speeds and feeds as they do about transforming their business and digital business and all that stuff. It seems like you're able to leverage that, so let's talk about some of those other trends. Cloud, that's the other big competitor, the public cloud. You've got a cloud option, but private cloud, we've talked about true private cloud. I think you're familiar with our research, there. How is that going, is it a tailwind for you guys? Is it working? >> Your research on true private cloud, I use it a lot, by the way. That's the idea, and I'll play it back, is having all the agility, flexibility, but also cost models of in the public cloud, but they want to do it on-premises with any time we don't leverage the public cloud resources, APIs, resources, as business demands. That's where my clients are looking to drive it. They want to have all the flexibility. They want to be able to go to the cloud for particular things. But it's lift and shift. We spend a lot of time, that is where we're getting the most traction. We spend a lot of time saying, "This is what we're seeing on-premises "with true private cloud, "and this is how they're going to "multi-cloud." We do show 'em all of our solution sets are now available in, not only IBM, but some of the other major clouds, because we do believe it's truly multi-cloud. But the biggest thing is helping clients understand what they can do along that maturity curve, and I think that's where clients really get the benefit of engaging. And always, the conversation does always come to something outside just storage. It comes into what you can do with server, or machine learning, deep learning, how to be data-driven, what we're doing as far as containers. We're not just saying our storage works for containers. Hey, are you wrestling with that? Let me give you, I'll give you IBM Cloud Private, which is a distribution that allows you to do, literally, in a matter of 40 minutes, be up and running, and then focus on getting a value. That's my storage message. You're saying it's not storage, but that's exactly how the clients are responding, and they need a partner to help them do that. It's not only having the vision of where they are and where they need to get to, data and cloud vision, but then they need someone to actually help them get there. Some things that don't seem like hard storage things really make a difference if our clients get the value out of the data. >> Infrastructure, as Tom Rosamilia says, "Infrastructure matters." It's interesting to see IBM's financials, the Z, Power and Storage driving a lot of the momentum. >> It's hitting the market where it needs, as far as the capabilities. You think about security and what we're doing the mainframe, it's amazing the capability you can accomplish there. Same thing on Power, the ability to do what we're doing on AI. You can do things on our infrastructure you just simply can't do. And then, analytic speed actually really does matter. Bandwidth does matter. And of course, storage fits in all that. >> Well, for 30 years, I've been hearing how hardware's dead, infrastructure's dead, and it just keeps bumping along. Sometimes you see a little spike. You have to have infrastructure for AI and this cognitive world, as you guys call it. So, Ed, great talking to you. Thanks so much for coming to TheCUBE. I wish you continued success. >> Thank you very much. >> Appreciate the time. >> Keep it right there, buddy. We'll be back with our next guest right after this short break. You're watching TheCUBE live from IBM Think 2018. We'll be right back. (fast electronic music)

>> Narrator: Live, from Las Vegas, it's The Cube, covering IBM Think 2018. Brought to you by IBM. >> Hello, everyone and welcome back to our day two of coverage here in Las Vegas, where IBM Think 2018's The Cube's three days of wall-to-wall coverage day two. Yesterday, we had kick-off, kind of partner day. Today's really the kick-off of the event. CEO of IBM up on stage for the keynote. I'm John Furrier with Dave Vellante. Dave, we're doing seven years or so plus all these six shows coming down to one for IBM Think. It's a packed house; you can't even get through the hallways. Looks like they need to go to Sands Convention Center. >> Dave: (laughs) or Moscone. >> Or Moscone, or somewhere bigger, they need a bigger boat, but the keynote kicked off, Ginni Rometty was up there. Interesting, putting smart to work, quantam, blockchain, AI data and she kind of laid out the cloud strategy, you know, using data in public cloud and private. It's clear where they're going with the cloud. Your analysis of the keynote, what's your thoughts? >> Well, first of all, John, as viewers know, I mean, I'm a big fan if Ginni Rometty. I think she's been overly criticized, but I think she's a great presenter. When I compare Ginni's presentation skills with some of the other CEOs in the industry, I think she's far superior. She connects with the audience, she looks great, she's really cogent, she's well prepared, so, I really like her as a presenter and as an executive, and, you know, another women in tech, you know we love that. Yes, you're right, putting smarter to work was her theme. She's talkin' about 30 to 40,000 people at the event. There's too many people to count I guess. You can't really figure that out, and, so, it's big, it's packed. She also did a theater in the round which was different. I noticed last year ServiceNow did that. I really like that style, so that was kind of an interesting thing. Ginni talked about three exponential growth areas. So, I'll lay 'em out and then, we can talk about it. She said they come every 25 years. The first was Moore's law, and we all know what that is, and the second was Metcalfe's law, the value of the network increases exponentially if the nodes in network increase, and then, the third, which is upon us now, is data plus AI. Her supposition was that is going to usher in a next era of incremental growth, because you're going to out-learn the competition, and she used this term of incumbent disruptors, and I heard that and went okay, hold on, (Dave laughs) 'cause I don't see it that way. >> Yeah. >> I don't see the incumbents as the disruptors. So, that was my first reaction, and then, she brought up three customers, Verizon, and I'm like, "Verizon? "A big telco is a disruptor, come on! "They're gettin' a disruptor by over the top.", but the CEO came on, Lowell McAdam, talkin' about 5G, so we'll talk about that, and then, Maersk, IBM has a joint venture with Maersk, so, Michael White came up, he's the CEO of that. Now, Maersk is using blockchain, and Maersk we all know is the container company and they're attacking inefficiencies with blockchain, so I thought that was actually a really good example, and then, Royal Bank of Canada, RBC, came up. You know, banking, to me, is an industry that has not been disrupted yet, and, so, I, again, was initially negative toward this idea of incumbent disruptors, 'cause I don't think the incumbents are disruptors, and we'll talk about why I think that, but I thought IBM did a pretty good job of showing how incumbents can actually take AI and blockchain and, at least, defend against the disruptors. >> I mean, it's clear to me that she's obviously playing to the crowd with the digital debt transformation. I mean, we talk about these traditional companies, they need to transform, and she brings up Moore's law and Metcalfe's law kind of to take a view of the past, but to look forward, she's kind of saying, "Lookit, Moore's law make things smaller, faster, "cheaper, doubling every six months." That's just on the, I mean, this applies to IoT, quantum makes everything else. Metcalfe's law I think is very relevant, 'cause if you look at blockchains about decentralized internet, you're talkin' about decentralized applications, that's where blockchain will play the major enablement there, that's about network effects, so you bring network effects in with Metcalfe's law, Moore's law on the equipments on the hardware side, I like that, so, that worked for me. The disruptors, I think it's more of overplaying her hand on that, because I just haven't seen any evidence of any incumbents truly disrupting themselves. So, maybe you can talk with Microsoft, IBM's trying to transform, but at the end of the day, they got to look back and learn from the internet era. If you don't jump on these next waves, you could be driftwood, right? So, you got to surf the new waves, and I think that's what I heard her say is IBM is putting data at the center of the value proposition using AI as a front end for that, make it smarter, and then, using blockchain as an infrastructure and protocol level opportunity to take the IBM software and data plane and wrap 'em together. So, if you look at it, you got data at the center, blockchain on one side, and AI on the other, it's the innovation sandwich. That, for me, works for me, now, let's unpack that. How real is it, and that's going to be what we're going to talk about, and I think that's a good strategy. All the elements are in play. >> Well, I think the other piece of that sandwich, maybe it's the dressing on top, is the cloud, 'cause you have to have scale and network effects in order to achieve that innovation. I just want to mention, she talked about three other things that you are going to do as a customer. You're going to, one, leverage digital platforms, you're going to, two, embed learning in, virtually, every process that you do, and, three, you're going to empower humans. So, she put forth this idea of augmented intelligence, and, as I predicted yesterday, she, unlike Larry Olsen, she doesn't come right out and slam her competition, she does it in a classy way. She said, quote, "IBM is not "in conflict with your business." In other words, we're not taking your data and then, remonetizing it at the back end. That's a big deal, IBM makes a lot of noise about that. So, it's really augmenting humans, not in conflict with your business, and bringing advanced security to things like blockchain, >> Yeah. >> and cloud, and AI. >> I like her term security to the core, I like that, but that kind of gives the impression that's core to all things, but if you look at the megatrends that are impacting the incumbents and the people trying to do digital transformation, as well as the new startups, Dave, that are trying to get a new position in the landscape is clear. You got blockchain, you got decentralized apps, you got AI, but the data's critical, and she mentioned some cool things I like with the cloud which was she's saying, "Lookit, we'll make "the data a really big thing for you. "If you want it in public cloud, "you can have it in private cloud." So, she's looking at cloud as much more of a hybrid approach on private, kind of hinting at the GDPR problem that we know's out there. So, if you want to move your data around, that's a critical asset. Also, if you look at what's going on in the news today, these days, is Facebook is getting slammed because how they were hacked with the election, and other weaponization of data, this is a big deal for companies, and I think if IBM can play that card to leverage the data and have the confidence of the companies that they serve to say, "Lookit, data's got to be owned by you, "but has to be managed in a way that's dynamic, "whether it's a GDPR or some other regulatory issue.", and, believe me, blockchain's going to have some. So, you know, they could come out and get in the front of this new wave, and I think that's a good play. So, it wasn't just a recycled cloud show, it wasn't just AI Watson, I like how she put it together. >> So, just touching on a thing, you mentioned Facebook. So she talked about Moore's law ushering in this era of back office productivity. She didn't mention Wintel; I think it's still, probably, too painful for IBM to think about that. Metcalfe's law, she said ushered in, sort of, the Facebook era. I think that's fair, the network effect of Facebook, and then, she said, "Hopefully, you know, "they'll call this Watson's law." I don't know if that's going to happen, but that notion of, >> Wishful thinking. >> hey, hey, you got to be power of positive thinking, but that notion of exponential learning. I want to talk about cloud for a minute. You and I had some interesting debates yesterday in our open about cloud. Oracle announced its earnings yesterday, cloud growth 30%. I see Oracle and IBM as very similar in their cloud strategies; both companies would vehemently disagree with that, >> Yeah. >> but I think they are very similar in that sense. The street didn't like it, because Oracle cloud only grew at 30%, stock's down, okay, great, but, to me, IBM and Oracle are similar in that they're basically cloudifying their business. They're allowing their clients to onboard customers to the cloud, putting their applications portfolios, their SAS products, their middleware into the cloud, IBM putting mainframe class stuff in the cloud, they're putting power into the cloud, storage into the cloud, pretty much everything into the cloud if you want it. Now, that's not easy to do >> Yeah. >> if you've got, you know, legacy businesses, obviously, AWS has a blank sheet of paper, that was kind of your point yesterday, >> Yeah, yeah. >> but I like the differentiation that I see from the companies like IBM and Oracle, and there really aren't many others like that. >> Yeah. I mean, my point yesterday was the definition of cloud has been totally mangled, right? Like, it's different, if you're Amazon, they have a slew of services, they have more services than anyone else on the planet, and they have more people using those services, so, by that standard, Amazon is clearly kicking everyone's butt, but that's just their perspective. If you look at IBM, their services are applications, same with Oracle. So, if you look at what IBM's doing is they're taking the same approach. Services and applications are going to be IBM's view of the cloud, but IBM's taking a multicloud approach, and I think that's different, and, when you put the data as the central component of the architecture, you're basically saying, "I'm going to look "at the cloud as more of a commodity layer. "I'll let the customers decide which cloud to use.", and that's a better strategy, now, it's hard to do multicloud, so maybe they're buying some time, but I think that's a good, solid strategy to take if they're not going to be trying to push their own cloud as 100%, because not all customers will sole source cloud unless there's functionality that that cloud does. For instance, Amazon is winning the public sector business like it's nobody's business, because they have the only cloud that has the ability to do classified and non-classified cloud. Nobody else has it, so, from a log speck standpoint, they're winning everything and from the DOD, CIA, and government. What IBM has to do is go into customer requirement saying, "We're the only company that can provide this." That's a unique opportunity for IBM. I think that's a winning approach rather than going on a frontal arms race of services with Amazon, and that's what all the big guys are doing. Microsoft, Oracle, IBM are not taking on Amazon directly, because they're going to have to match feature for feature, and then, Amazon wins that game every time. >> So, I want to go back to something Sam Palmisano said when he was CEO of IBM in 2012 on his way out. HP was the hot company, Hurd was running the company, and he was asked, "Do you worry about HP?" He said, "I don't worry about HP, "'cause they don't invest in R&D. "I worry about Oracle, 'cause they invest in R&D.", and, again, what I like about Oracle and IBM, they both invest in R&D, IBM even, you know, core stuff around blockchain, certainly quantum computing and the like. So, I think that is a very positive dynamic for both of those companies. >> Well, I mean, IBM's R&D is a secret weapon, I think, for them; they don't overplay that much. They do talk about it, but we look at what blockchain potentially could be, and I think, you know, IBM's certainly doing the messaging on blockchain. It still has a bunch of ads on T.V., and they're trying to make that a kind of a global brand, but blockchain speaks to a new infrastructure, right? It's not just distributed computing, it's decentralized computing, and we were saying on the Cube and we've been reporting there is a new wave of software developers coming on the market that are going to be writing decentralized applications for token economics. The notion of tokens isn't about ICOs and those scams, although there's a lot of those going on. The notion of token economics fit with a mobile cloud decentralized architecture whether it's IoT, or end users, or applications, token economics is going to change the impact in efficiencies up and down the stat. So, to me, the developer community that's rushing into the market on the decentralized applications will be a major opportunity, but you got to nail the blockchain and that tech is just a moving train from a protocol standpoint to an infrastructure. So, to me, I like what IBM's doing with blockchain. I think that's going to be an opportunity to move the ball down the field. >> So, the exponential innovation formula, in my view of the next ten years, is going to, and you nailed it, going to combine data with artificial intelligence, or machine intelligence, and cloud economics, and there is a set of digital services emerging. >> Well, cloud and token economics, both, it's two. >> But, so, yes, but, so, and that's part of it, but there's a set of digital services emerging in this fabric, and they're not bespoke services, they're part of this integrated fabric. The extent to which people leverage those services, those digital services, to create new business models is going to determine success or failure. Data, at the core, is critical. >> Yeah, yeah. >> I think you're right on on that, but what I like is that IBM is trying to solve some hard problems with AI. >> I mean, lookit, I was tweeting yesterday all day on some highlights from my Puerto Rico trip on the cryptocurrency events we've been covering, and one thing that we reported was the killer app for blockchain and cryptocurrency and decentralized apps is money. Money is the killer app, and we see that with the hype cycle with the ICOs, but, if you look at what IBM's doing with the supply chain side of their business, perfect storm for supply chain innovation. Blockchain is about money, marketplaces, and nailing inefficient incumbents. So, if the incumbents want to be disruptive, they're going to have to disrupt themselves by removing inefficiencies out of the system. >> Well, and the Maersk example was a good one where there's inefficiencies, you know, 20% of the cost of moving containers is admin stuff. Sometimes the admin costs exceed the shipping costs. So, that was a good example, but, again, I see blockchain as one component in this fabric, in this puzzle. >> Day two, Cube here, kicking off wall-to-wall coverage. Three days of live broadcast talking to the thought leaders. Extracting the signal from the noise, the Cube, the number one leader in live tech coverage. Go to cube.net to check out all the footage and siliconangle.com to check out all of our articles. We're reporting and the team reporting all week, and that analysis of Ginni's keynote, well done, Dave. More coverage after this short break. (techno beat) >> Narrator: Robert Herjavec.