Growing the IBM-AWS Alliance – The Six Five on the Road at AWS re:Invent 2023

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Transcript:

Patrick Moorhead: The Six Five is On The Road at AWS re:Invent 2023, here in Las Vegas. We are in the IBM Client Lounge, just lounging it up here, talking about partnerships, technology, and the ever-growing alliance between AWS and IBM. Daniel, it’s great to see you buddy.

Daniel Newman: It is good to be here. It’s been a busy week and as it always does, the re:Invent show is a little bit bigger than it was last year and the sprawl is a little bit bigger, as I’m coming to find out, as I’m trying to get from point to point here. But it’s been a big day for AWS, announcements galore, we like to say, from chips to SaaS.

Patrick Moorhead: That’s right.

Daniel Newman: And of course, partnerships, hybrid cloud, hybrid cloud in AI, as our friends at IBM here would say. And of course, the relationship between IBM and AWS is on full display.

Patrick Moorhead: It is and we saw it really grow starting last year, and let’s get a check-in. Roger, great to see you. Deepak, welcome to the Six Five.

Deepak Singh: Thanks for having us.

Patrick Moorhead: Absolutely.

Daniel Newman: Well, we started off, where we want to finish at least this next question. IBM and AWS, look, a year ago, Roger, I think we sat down with you and you started kind of walking us through this and the pace of the partnership had turned, it was the next year. And we’re hearing some buzz in the air here, having talked to some of the GMs across AWS, they’re glowing about the partnership with IBM. Talk a little bit about how the partnership is accelerating, how it’s changing and what’s new this year.

Roger Premo: Yeah, first I think to begin with, where you began, it’s the extension of a trend, right? We’ve really made AWS a strategic partner for IBM. It’s a place where we want to invest and across all of IBM’s businesses we’re collaborating with AWS. And so if it’s our consulting business where we have a rapidly growing practice, one of our fastest growing practices for IBM consulting, we’ll talk about IBM software, where we’re bringing more of our SaaS titles to AWS and even our infrastructure business, we’re collaborating on things like mainframe modernization. Every part of IBM is collaborating with AWS and that’s what makes it such a special partnership.

Patrick Moorhead: Deepak, I mean you’ve been all over AWS, we talked in the, I guess we’ll call it the green room, about how many times maybe we crossed paths but maybe didn’t.

Deepak Singh: Yeah.

Patrick Moorhead: But you’ve been all over AWS in some really important stuff from the beginning days of EC2 to containers and many different things. How about from your point of view, maybe answering that same question that Roger did?

Deepak Singh: Yeah, I’ll actually go back to a company that’s part of IBM now, but started before, back on EC2. I worked very closely with Red Hat and then obviously on the containers side, worked very closely with Red Hat and then Red Hat joined IBM. And that’s actually part of the relationship too and it’s done exceptionally well. So I’ll start there and then get to some of the things that Roger talked about, where my first, I would say, AWS-IBM partnership was working on Red Hat OpenShift on EKF, on Amazon, the Rosa product. And we have customers, we talked about one just a few minutes ago, USA, a joint partner that’s using Rosa and other services on AWS. And it’s great to see how that has grown. But what gives me tons of pleasure and excites me a lot and Roger and I have been working together for two years now, is how things like the core database with Db2 is now part of RDS. One of the things that so many of our customers come to us and ask us for is, “How can they run the databases they’ve run for a long time, but as a managed AWS service?” And the one that was clearly missing was Db2 and the fact that we were able to announce it at re:Invent this year, that’s awesome for me. And the consulting business has been one of the most successful partnerships that I’ve seen between us and any partner and how well it’s grown. But just personally seeing Db2 within RDS and what it’ll mean for customers, is amazing.

Patrick Moorhead: Yeah. It was a big surprise to me. But again, I keep getting surprised by what the two of your companies are doing together. Roger, I think you pulled me and Dan into a room to go through this right before some of the big announcements last year. I’m like, “Okay, I totally didn’t expect this.” And I think it’s a good sign for the maturing market, where the two of you are focused on clients and what do they want. IBM set of clients wanted certain things and they wanted integration and the two of you just got together and did the right thing. And I’m a little surprised, Db2, so there we go again. But maybe I’m just not paying attention. I’m not a good analyst or something. I can’t predict these things. I don’t know.

Daniel Newman: I think you’re doing okay, Pat.

Patrick Moorhead: I appreciate that.

Daniel Newman: I think the challenge right now, is that the enterprise scale, the cloud and AI is creating, is making companies have to think really hard about how they engage, the vendor engagement model and they want simplicity. And of course, you’ve got a generational shift going on, younger CIOs and CTOs leading companies, they like consuming in marketplace, which is a really important part of, I think the partnership you two have had is making things more consumable. So as these companies are really trying to navigate these complex landscapes knowing that their partnerships are close, they’re accessible, they have simplicity and they can get answers. And whether they have a challenge with IBM or AWS, they can go to either and friction is removed, problems are solved. But Pat and I sort of have a running joke, it’s becoming almost a diatribe on this show about AI because we just can’t do a video. You and I did a video about your AI fund. I mean we can’t get five minutes into a video anymore on any topic without ending up back on AI or Generative AI. It’s such a big thing. But organizations are really trying to overcome the AI challenge conundrum. It’s not all just GenAI, but let’s talk about that for a minute. Deepak start with you.

Deepak Singh: Yeah.

Daniel Newman: How are you approaching this? What are the challenges that you’re seeing companies face when they’re implementing Generative AI?

Deepak Singh: Yeah, you started with all the things I’ve done at AWS, so guess what I do now?

Patrick Moorhead: I knew it. You’re always in the hotspot.

Deepak Singh: Yeah.

Patrick Moorhead: I think there’s a trend here.

Deepak Singh: So I run the Amazon Q team, the developer experience team right now and in overall, Generative AI. So I’ll bring it to, and we’ll segue onto some of the amazing work that our two companies are doing together, especially on the consulting side with Watsonx. I think your point that every CIO in the world is trying to figure out, five minutes seems too long in a conversation to get to AI these days.

Patrick Moorhead: I know, we’re slow.

Deepak Singh: And if I go to just the conversations I’ve had today or the last couple of days, some people have started, but what they need is help to figure out, “How do we actually take this and make something meaningful out of it?” So obviously on the AWS side, and I’ll talk a little bit about that, we have a suite of products. You heard Adam talk about the silicon part of the stack, the parts where you can get models in, whether it’s in SageMaker where you can get a variety of models or the more curated foundation models in Bedrock, all the way to the apps that you can run on top like Amazon Q, just to toot my own horn for a second. But I think the key is, they’re looking for people who can help them go from, “Here’s an idea, I think we can work to actually making something meaningful out of it.” And I think that’s where IBM comes in. IBM has a long history in machine learning and artificial intelligence, decades long history. We like saying in Amazon, “We’ve been doing it for 25 years, IBM has done it even longer.” And we’ve seen that the number of people on the IBM side, who’ve got certified on the Generative AI and AI side on AWS is that, there’s a compelling need for customers to work with two partners they can trust, to help figure out how do you go from, “I don’t know what to do, to, we are making our organizations that much more productive.” And some of the work that Roger and the IBM folks have done over the last year, in expanding and what they can do on AWS, is a big part of that. Roger, you want to expand on some of the work that’s been happening?

Roger Premo: Yeah. So I think Deepak, to start where you were, I mean, I think we’re seeing a world in which there are so many of these POCs happening in Generative AI. Some of those have made to some scaled pilots, but many of them haven’t made it to true production impact and really changing the trajectory of businesses. So I think as CIOs think through how to actually execute that in their business and really get business value out of Generative AI, I think that’s where we come together. So we talked about Watsonx. So we have clients that want to do AI in their data center, but they also want to do it on AWS. And most of our clients have said, “I’ll start with a vendor with an API in any location, but eventually I want to bring that Generative AI to where my application, my data and my workflow is.” And for some many of those customers, that is on AWS. So that’s why Watsonx pieces of it, are already available on AWS, I’m going to be GAing additional components, Watsonx governance, around AI governance in December. So we’re continuing to GA that software on top of AWS because that’s where clients want to deploy that technology. And then some of the capabilities we have, if it’s in the governance space, to Deepak, where we do have a long track record of doing AI responsibly and have led on governance, they want to bring some of those capabilities as they build AI with AWS, they can bring some of that governance differentiation or if it’s other components of the AI stack from IBM together. So I think it’s just a natural part of our partnership and in a world where they’re still clients, that they’re still growing in a data center but they’re cloud vendor of choice is AWS, the natural partner to help them with that is IBM.

Patrick Moorhead: So is there a symmetry, meaning IBM clients need help and you introduce a unique capability AWS has and AWS has some customers that you see that IBM has some unique customers. Is that how this relationship’s working?

Deepak Singh: Both ways. I mean sometimes it starts because AWS has a client, I mean I would say, one of the ways that it happens, Db2 is an example of that is, some team in a company decides they’re going to start using AWS heavily and from there, that usage expands. Then we get to the teams that have applications on-premises or have been using IBM software for a long time. Today, the fact that there’s IBM software available on AWS as services, suddenly makes it, “Hang on, we can also start moving our applications over, oh by the way, we have to wait but we can’t move our database over.” That’s changed. And now you can expand that to, “We have AI practices or AI applications that we want to run.” And we may have started on AWS or there may be a mix and IBM’s such a natural partner to help them do that because they’ve been working with them for years, they know them, they trust them. And the other side is the one that Roger just talked about. You have folks who are IBM customers but have chosen AWS as their primary cloud provider. That transition, it makes it a lot easier. So both paths are ones that I would say, see about the same.

Roger Premo: Okay. I’ll just add, where you’re starting from though is, I think clients are trying to execute their digital transformations and now more than ever it’s become clear that, this is for the large automotive company a couple of weeks ago, if you’re not on a path to have in-car experiences, self-driving, automated manufacturing, all these things that you’ll need to compete in that industry, if you’re not successful in that digital transformation, it’s not like it was maybe a few years ago, that is success or failure for the overall business. And so the partnership we have together, it’s helping clients accomplish that because it does have data center, it does have IBM technology, it does have AWS. And so when there’s so much value to be created for our clients, there’s so much for us to partner around. And so that’s why if it’s Generative AI with Watsonx or the Q services and so much else from AWS, it’s all the other pieces of the IBM business or the AWS business, we bring those together to help the clients accomplish that digital transformation. And I think we are truly seeing that over the next several years, that technology adoption is truly part of what will pick winners and losers in a variety of industries around the world. So we’re really motivated to help our clients through that as well.

Patrick Moorhead: You said something kind of interesting, but homogenous environments just aren’t going to exist and especially unless you’re literally birthing a business today and starting it ground up. And so as you mentioned that it could be Watsonx, it could be Q. How do you resolve for that? That’s one of the things I’m really interested in getting your off the cuff answers is, how do you resolve for the fact that there’s so much overlap, but yet these very heterogeneous environments require it and partnering is necessary. So is it ultimately just customer centricity? Is it ultimately, when you’re going in together and you go, we’ve got Bedrock, we’ve got Q, we’ve got Watsonx, and how do you navigate that, keep a really healthy partnership, create happy customers, and ultimately, deliver on the promise of more productive and more efficient businesses?

Roger Premo: Yeah, I mean Deepak, you should weigh in too. But I think first and foremost, it comes from, what is the right answer from a technical architecture perspective, from a client that will advance that agenda for them? So we talked about a number of clients that are adopting Red Hat in the data center, where how they’re doing application development in the data center at the edge and then the Rosa service on AWS. So if they want to extend the same capabilities into the AWS environment and draw upon those services, Red Hat and IBM become the natural partner for that. And I just go back to one of the conversations I had earlier with Deepak. If you talk about true partnership, when he ran the container services, he did reviews with the teams and he gave the same review and hard time to the AWS services and to the Red Hat services. And I think that’s the highest form of partnership. And then it’s about the right technical architecture that helps the client realize their goals. And a lot of times there’ll be an IBM or Red Hat answer, if it’s Watsonx extending across environments or Red Hat extending across environments, sometimes that’s going to be a top to bottom AWS environment depending on the nature of the client problems. And again, that’s back to why IBM consulting matters because they’re often the advisors, the architects, helping clients navigate that heterogeneity because there’s a lot of CIO, CTOs that look at that heterogeneity and it is hard to see a path through it that actually accomplishes the business goals.

Deepak Singh: Yeah, I’ll add a couple more things to that. One is, it’s not just the big companies. Even if you are a startup that maybe was born in the cloud and started, you may acquire another startup that has a different posture. It’s just the world is inherently messy. I think in AI in particular, the happy customer is the best answer? It’s so early, nobody knows what the right answers are, they’re experimenting with everything. So those hybrid mixed architectures that Roger was talking about, are almost, especially for large enterprises in particular, they’re kind of what they do and they have to. So having a trusted partner, and that’s where IBM consulting comes in, is how they get there in many cases. And the way they use models, which models they choose, they’ll start with some trusted ones. They’ll experiment with five others along the way and having someone who can sort of just hold their hand and then make sure that the outcome is successful is, I think where the partnership has really flourished, is making sure that we have successful, happy customers at the end.

Patrick Moorhead: I want to shift to something that is, I know very near and dear to IBM’s heart. And that’s the mainframe. I mean it’s been the absolute bedrock for transactions, trusted computing for years. And many people have tried to replace certain functions and failed miserably. I’ve seen it. Trust me, I track it as an analyst. Now we’re talking about mainframe modernization between AWS and IBM and I’m just curious, what does that mean in spirit and goals?

Roger Premo: Again, I think this is one we talk about the partnership working. I think to compliment the AWS team, they’re leaving a lot of the Amazon culture, which is really around customer centricity. So a couple of years ago we spent time on, “What are the real economics of doing mainframe migration versus modernization?” And mainframe is an old world word, but it’s a modern technology and for the massive scale transactional workloads that cannot fail, it is the best platform to run those on. So kind of showing that journey to AWS, they actually changed the mainframe migration practice to be called, modernization.

Daniel Newman: Oh, I remember that distinctly.

Roger Premo: Yeah, but that is living that client value. But then if you work together with a customer to say, “Hey, listen, they’ve taken a lot of applications, landed them on the mainframe.”

Patrick Moorhead: Right.

Roger Premo: Some of those, they’re digital applications that should be on the cloud or AI workloads that should be on the cloud. If you take a fresh look at that and take advantage of really using the mainframe for the things, it’s great at using AWS for the things, it’s great. That’s a great answer for our customers, it’s a great answer for IBM. It’s a great answer for AWS. And I just think it’s an example of, there are folks that have the conversation inside of IBM when we’re first saying, “We need to partner with AWS around mainframe.” That was a challenging conversation. We’ve really come a long way on that and I think it’s just another great example of saying, “There’s no part in our business where we can’t look at, what does the customer need and work back to the partner to deliver to.”

Patrick Moorhead: Right.

Deepak Singh: One of my favorite meetings all year, I don’t know if I’d call it a meeting, it was at IBM Think earlier this year in Orlando, where Roger and I met a set of IBM customers, mostly in the financial services space, who are all mainframe customers but also AWS customers. And that conversation, they were having it between each other on how they think about mainframe modernization and what pieces are the ones that stayed on the mainframe, how they think about pulling pieces out. It was enlightening for me and I think the fact that they’re adding new pieces around the mainframe on AWS, like even Lambda functions like running against mainframe transactions, it was a fascinating discussion to hear, how even our customers, their brains start going into overdrive as well. And I think I would say, of all the things that we’ve done together, that was actually among the first real signs that we could sit down and talk about a topic where most people would think, “There’s no way that twain shall meet.” But it did and I think that that was great to see.

Patrick Moorhead: Good job guys.

Daniel Newman: All right, so we’ve only got a minute left. Kind of want to tie this together nicely and just put the, what’s next, question out there? How does this partnership evolve, Roger?

Roger Premo: I don’t think that there’s really any surprise there. It is continuing this vector and I want to make sure it’s the geometric curve, not the linear curve. I think we have so many different fronts of growth together. I guess I’d be remiss on if I didn’t mention our acquisition to Apptio this year, which is already a great AWS partner and accelerating that. So I just think it’s going to be more of the same. But I think so many of the things we talked about, I think the mental block of IBM and AWS being great partners together is something that a lot of the world hasn’t yet understood. So the more proof points we have and the greater scale of it, will help people realize just how strong this partnership is and how much it can help create value for our joint customers as well.

Deepak Singh: Yeah, the only thing I’ll add to that is, I think you mentioned marketplace earlier and how you can consume IBM software through marketplace. For a lot of IBM customers, there’s something new. I am looking forward to that becoming the norm for all of them and the fact that when they think IBM software, they’re just purchasing it as a service running on AWS. We’ve had a great start. I think it’ll explode next year and I’m really looking forward to that.

Daniel Newman: Deepak, Roger, I want to thank you both so much for joining. Patrick and I here on The Six Five. Let’s do this again sometime soon.

Deepak Singh: Thank you for having us.

Roger Premo: We will. Thanks.

Patrick Moorhead: All right, good.

Daniel Newman: All right everybody, hit that subscribe button. Join us for all of the episodes of The Six Five On The Road, here at AWS re:Invent 2023, in Las Vegas. In fact, subscribe to all of our episodes. But for this show, for this episode, for Patrick Moorhead and myself, it’s time to say goodbye. See you all soon.