IBM Security’s Program for Service Providers & Innovative Solutions – 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. We are in the IBM Partner Suite and we are talking partnership, security, MSPs, all the things that come together to give end customers a complete solution. Dan, we always say it takes a village and it takes partners. And this is one of the more interesting partnership discussions we’ve had. It involves three different companies doing three different things.

Daniel Newman: It does, Pat, and it’s also small businesses and midsize companies. A lot of times, you and I being focused on the big markets, you end up talking about those large, sometimes monolithic and giant companies all the time. But let’s face it, 90 plus percent of the companies in the world are smaller businesses. They want to benefit from cloud, they want to benefit from security, they want to benefit from AI, and they want to be able to deliver services to big companies. And so, the partner ecosystem really makes that possible.

Patrick Moorhead: It does. So let’s bring in Justin and Nick. Good to see you.

Justin Copie: Likewise. Thanks for having us.

Patrick Moorhead: We’ve got Nick from IBM, Justin from Innovative Solutions. First time on The Six Five, but hopefully not the last.

Justin Copie: Yes. I hope not. Thank you for having me. I appreciate it, guys.

Patrick Moorhead: Got it.

Daniel Newman: I think we’ve got two newbies.

Patrick Moorhead: I don’t know. I guess it’s two newbies.

Daniel Newman: We love bringing on new guests, and then we force them to come back.

Patrick Moorhead: Exactly.

Justin Copie: You force them.

Nick Otto: I love it.

Daniel Newman: Nick, let’s start off with you. Just give us the quick background. As we talked a little bit, you heard Pat and I teeing this whole thing up. We obviously get the partner thing, but talk about what you’re doing at IBM and the role. And then, of course, make the tie to AWS and re:Invent since we’re here in Las Vegas.

Nick Otto: First of all, thanks for having me on. Really excited for the discussion. So I’ve been at IBM for about 20 years. I’ve been in every part of our business.

Patrick Moorhead: Congratulations.

Nick Otto: Thanks. I’ve been on the consulting side of our business, the software side of the business, hardware, corporate headquarters. Moved into ecosystem now probably about three years ago, and I’ve been leading our strategic partnerships for the company for about a year-and-a-half. And those are our biggest partners. They’re the partners that mean the most to IBM. They cut across our entire business. AWS is one of those critical partners that we’ve seen incredible growth with over the last year-and-a-half to two years. This event is always a great time to look back at the previous year and the progress that we’ve made, but you guys hit on it perfectly in the intro. I think what we’re seeing right now is the capabilities that we’re bringing to life with AWS, our software portfolio. We now have over 70 offerings live on the AWS marketplace. We have joint infrastructure offerings, mainframe modernization for some of our bigger clients. But one of the things that’s most exciting and I think most relevant for the discussion today is that connection to the rest of the ecosystem. How do we make sure that we can take all of the players, pull them together, to drive better outcomes for our customers? Which I think is the part I’m most excited to talk with Justin today about.

Patrick Moorhead: Yeah. Nick, I was really surprised. I feel like we were in this same suite. I’m sure it wasn’t the exact suite.

Nick Otto: It feels like it.

Patrick Moorhead: It feels like it. And I know it sounds maybe a little trite to characterize, but it did feel like a new IBM. I followed IBM for over 30 years. A competitor to them, a partner to them, and now an analyst to them. But the big announcement, putting your software on a big CSP platform was a big deal. To me, it represented a more modern IBM. Also, we talked about this in the green room. The cloud is a teenager, it’s 14 years old. It’s not perfect, but what we’re getting there in terms of maturity and you putting your software is a very pro-client move and I appreciate it. Justin, let’s maybe take this the other way.

Nick Otto: Sure.

Patrick Moorhead: If you can introduce yourself, a little bit about your company, Innovative Solutions. And then, talk about how your offerings intersect IBM and AWS.

Justin Copie: Happy to do it. Thank you again for having me. I think this is an incredible time. Truthfully, I’ve been with my company since 2003, but my business was started in 1989 when I was in kindergarten. The founders at that time were doing …

Daniel Newman: What a way to start a true story.

Justin Copie: They were doing IBM AS400 programming. It was all green screen programming and they built this remarkable business in Western New York, helping customers leverage these systems to in many ways just operate and run efficiently. When I came into the business in 2003 as an intern, I had a lot to learn. And I still learn every single day. You fast-forward to 2018, I had since bought the business from the prior owners. I was actually out here in Las Vegas at a conference that … Another hyperscaler was putting a conference on. I walked out of a keynote and I said to a couple of folks back in Rochester, “We’re toast if we don’t figure this out.” And the two gentlemen on the other end of the line said to me, “Justin, don’t worry. Come back to Rochester. We were just in New York City at the AWS Summit and there’s a great opportunity here for us.” We decided to pivot the business that year to go all-in on AWS. Our business focuses on helping small to mid-size businesses and startups leverage the power of the cloud.

And so, through the last four years, we’ve learned how to go to market together with AWS. We’ve learned how to help customers understand the vast set of offerings that AWS has to offer. Just last year, we received a phone call from IBM saying, “Hey, would you be interested in having a conversation with us? Because your relationship with AWS and how you help customers leverage the power of the cloud is something we want to do more of.” We said, “Well, we may decide that that’s something aligned. We may not.” Truthfully, as a system integrator, we have to maintain focus. It’s extremely important. Otherwise, we can’t help our customers to the most effective ways. And so, through some further discussions with the IBM team, we discovered that there was a real opportunity to offer managed security services to customers there were in need of real security offerings. Set it and forget it security offerings. We built a remarkable SOC-as-a-service, we call it MSS, Managed Security Services, all on the backs of IBM software, which has been remarkable. What is even more remarkable is some of the announcements that we’re making today around generative AI technologies. Would love to share more about that with you guys.

Daniel Newman: Justin, we’ll come back to that in a bit, because I think you’ve teed it up really well. By the way, I love a good entrepreneurial story. I think we went to kindergarten around the same time, by the way.

Justin Copie: That’s great, man. I love it.

Daniel Newman: Pat was 40. I’m just kidding. We get on pretty well.

Patrick Moorhead: We are best friends.

Daniel Newman: We do. We do. Part of the whole platform is we like to have a little fun with each other.

Justin Copie: I love it.

Daniel Newman: So I hope you guys don’t mind.

Justin Copie: No, that’s good.

Daniel Newman: Nick, you guys made some announcements related to IBM Security. You’re introducing some new offerings to your ecosystem. Talk a little bit about that, because I’m guessing that’s what Justin is going to be building on here in a minute.

Nick Otto: No. I think Innovative has been ahead of basically the market around this. Taking our solutions on AWS and creating managed services wrapped around it. What we’re announcing at re:Invent here is kind of the next generation of that. How do we make the software easier to package? How do we make sure that it’s got the proper integrations to native AWS capabilities? How do we make sure that, especially for SMBs, the partner, like an Innovative, can package things up the way that their end customer needs it, price it in the way that it needs to be priced, to have the different capabilities that they need to have? That level of flexibility and configuration … To get that into the hands of a partner like Innovative. To be able to bring the solution to market that the customers are asking for at the price point that they want. Especially, when you get into SMB, I think it’s something that we’re going to keep partnering with great partners like Innovative around, where you’ve got a long set of capabilities. But what are the right pieces to pull together to solve your customer needs? I think AI, we have a lot of great examples there too. Both on the security and AI front. As we continue to build that portfolio, making sure that it can be packaged in really easy ways for great partners to package those things up, put their services around it, and in this case, even put services with IBM technology and AWS technology all bundled up together and have that as a single marketplace offering. That’s the level of ease and flexibility we’re really looking to drive into the entire market.

Patrick Moorhead: It’s really been interesting. Some of the characteristics that SMBs … It’s almost been true, Nick. Sometimes I think it’s a misnomer to use SMB.

Daniel Newman: They’re small, but …

Nick Otto: Some of them are big.

Patrick Moorhead: Exactly. And then, your revenue definition is pretty high here. With that said, the smaller the enterprise, the smaller the business, the more that they have to rely on solution providers. When we do a scan in the security market, you have this classic characteristic, which is you have point solutions that are spreading like kudzu. You have to integrate those solutions. By the time you think you’re on best of breed, you’ve spent so much time and you’re on third or fourth rep back. SMBs need a partner to pull this together. So Justin, can you take what was said about IBM … What is the opportunity here? What are you putting on the table? What are you selling and what problem are you solving?

Justin Copie: I think it’s understated how significant two of the biggest companies in the world coming together and choosing to openly come together to enable more customer outcomes is. I remember last year here at re:Invent, IBM had announced their intentions to obviously do much more together on the heels of a strategic collaboration agreement they had signed with AWS. When we looked at the market opportunity and we listened to our customers who were buying managed security services over the past year, one of the absolute facts that existed was our small to mid-sized business customers and our startup customers, they needed to do more with less. That was the story. What we saw happen over the last four months, specifically with generative AI technologies, and now the consumerization of AI technologies, and everybody really understanding at a baseline level that you can ask a chatbot a question and you can get a pretty good answer in many cases … That opened up so many more questions for small to mid-size business owners that were like, “How do I do this responsibly?”

Patrick Moorhead: Right.

Justin Copie: What do I buy? What do I implement? How do I tie that together with really critical data that needs to be secure? And so, when we sat down with the IBM teams and the AWS teams and we looked at what was happening with marketplace, a very easy way for customers to transact? On a single bill. Where we looked at the compute environments … Specifically, on AWS already, and a lot of this data really being there … The next big question was, “How do we bring in technologies like IBM DataStage, Watson Chat and the chat assistant technology that’s a very easy interface for an end user to ask questions?” How do we look at watsonx.data.governance? Some of these really core technologies that IBM has been extremely committed to bringing down all the way to the SMB, not just the enterprise. I’ve never seen in my career such a significant proliferation of technologies in such a fast period of time start to come to market. And to Nick’s point earlier, I think we’ve got this opportunity to continue to work with folks like IBM, like AWS, where our customers have a real business need. They’re trying to solve a problem. And if we can help stitch that together, support that through a managed service, and by the way, if we can give the customer a single bill to pay, it’s much easier for them to transact.

Daniel Newman: For sure. I think the packaging is very important.

Justin Copie: I do too.

Daniel Newman: As smaller companies, the bandwidth … Usually, IT departments have a handful. And that’s at the larger end. The desire to have world-class security, the desire to be able to benefit from these generative tools, that was what caused that rapid rise of SaaS for instance in a lot of cases.

Justin Copie: It is.

Daniel Newman: But SaaS doesn’t enable the complete picture. And as companies get larger, they’ve got these very vast and disparate data states that lives all over and they need the bridge, they need the fabric, they need the tools. Frankly, most of them want to set it and forget it. They want someone like you to come in and do it. They’re basically saying, “Come in, do it, so that we can build that chatbot so we can respond to our customers 24/7.” Follow the sun.

Justin Copie: That’s right.

Daniel Newman: Make sure that data, that transaction is going to be safe. If they’re buying commerce on a website, we want to make sure absolutely that we never … Because a small business will never come back from a breach.

Justin Copie: That’s right.

Daniel Newman: So these things are imperative for the survival. It’s interesting for people like us, but when you think about it, you cannot understate how important this partnership is. But Nick, let me ask you this, where does it go? Because it sounds to me like what you’ve done … I mentioned SaaS. That was democratized over a few decades. Early companies built homegrown ERPs, and then others figured it out. And then, eventually they started SaaS. But this generative AI was in November of last year. It started to be a thing. And then, in January, anyone with a GPU and a little data science could do it. Now, you just subscribe to a service. How fast does this move? Where does it go? How do you guys keep enabling the partner ecosystem?

Nick Otto: No. Great question. I think you’re right. It is without a doubt the fastest moving market I’ve ever seen by far. And I think what’s exciting about our approach is we’ve been really consistent. For the last three to four years, our strategy has been hybrid cloud and AI. For well over a decade, we’ve been focused around AI. What’s been exciting is to see these things really converge in the last year. The convergence of hybrid cloud, having lots of different models for doing your AI … We were talking earlier, the partnership that Innovative has with Anthropic, with Cohere, with Bedrock, WatsonX. All those capabilities coming together to solve different types of problems, but do that in a multi-model, hybrid approach. That’s very much our strategy. And I think the hybrid component is really important with the relationship with AWS, because there’s going to be some needs that the client has to run this stuff on-prem. There’s going to be some needs that they’re going to want to move to cloud where their data resides. There’s going to be data residency concerns. How do all these tools come together in a way to solve the end problem? And then, how are you ecosystem-first to make sure that your partners can go out and wrap a service around all of this to help solve the problem of the customer? That’s where this is going to keep going. I think the only thing that I can say today is whatever we land on the strategy for today, it’s going to change tomorrow. New capabilities are going to come out. New compute is going to come out. New models are going to come out. Making sure that you have a hybrid, flexible, open approach to all of this, which is really the foundation of our approach to AI in general, is really where I think things are going to keep going.

Patrick Moorhead: Justin, how about you? A little bit about the future. How are you going to integrate that in? And I know it’s sometimes … What’s the right word? $100 billion companies address strategy a little bit differently. Especially, when you look at future opportunities. How are you going to zig and zag based on what I think feels like it changes about every quarter?

Justin Copie: If not every month, in some ways. No. It is a valid point. I’ve always believed that as a system integrator … And I think many system integrators feel this. Your best bet is to be agnostic, but to align with the customer and work backwards. I really feel like being in this business as long as we have, we are not a startup out of … We’re not just some SI that built our business over the last two years. We weren’t even built in the cloud. I remember when I came into the game with AWS in 2018, and it was all these born in the cloud partners. I didn’t understand what that meant, because we were born on the AS400. From my perspective, it’s like this. We see that customers and the small to mid-size business customer, they want to do more, more efficiently. They have real costs associated with things in their business and they see this opportunity right now with gen AI technologies. That’s the request. They’ve got board of directors that are asking them how they’re going to use this. It would be impossible for us to predict where this is going and where this is ultimately going to be. We have a lot of choice. As an SI, we could be multi-cloud. We could build relationships with other hyperscalers. We choose not to. We choose to go all-in on AWS, as I mentioned before, and build on this relationship with IBM who has best in breed technology.

Patrick Moorhead: Focused.

Justin Copie: I think one of the most encouraging things, and this is from the top down at IBM … At the highest levels of IBM down, we have seen this appetite at IBM to advance their business. I think what that means is really being fearless in cannibalizing some of the things that maybe have been done for many years prior, and really question how maybe customers bought technologies in the past, and how they’re going to buy them in the future. We’ve already tested some of those limits together. And it’s been remarkable to watch IBM move a lot of things that they never would’ve in the past to continue to capture. As a system integrator, that’s encouraging. As customers look at us and they’re like, “Why are you betting on IBM?” They see that. They hear that. For us, that’s the bet for the future.

Daniel Newman: I love seeing it. Be bold. Take big risks. Go hard. It sounds like this is definitely the plan and want to congratulate both of you on the announcements.

Justin Copie: Thank you.

Daniel Newman: Great entrepreneurial story.

Justin Copie: Thank you.

Daniel Newman: And I hope to have you all back soon.

Justin Copie: Look forward to it.

Nick Otto: Thanks.

Daniel Newman: All right, everybody. The Six Five is on the road. We are here at AWS re:Invent in the IBM Partner Suite. For Patrick Moorhead and myself, for this episode, it’s time to say goodbye, but hit that Subscribe button, tune into all of our episodes. We’ll see you all soon.