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International Business Machines Corporation (NYSE:IBM)

Deutsche Bank dbAccess Technology Conference Call

September 10, 2013 11:50 ET

Executives

Robert LeBlanc - Senior Vice President, Middleware Software

Analysts

Chris Whitmore - Deutsche Bank

Chris Whitmore - Deutsche Bank

Good morning. Thanks for joining us this morning. My name is Chris Whitmore. I am the IT hardware analyst here at Deutsche Bank. Very pleased to have Robert LeBlanc from IBM on stage with me this morning. Robert runs IBM’s Middleware business and perhaps a good place to start would be maybe to let everyone in the audience know what exactly that means talk through the products that fall under your domain and the like. Thanks Robert.

Robert LeBlanc - Senior Vice President, Middleware Software

Okay, thank you and good morning to everyone. I think we are the only people in Las Vegas that are actually up at this hour and good morning. My responsibility for our IBM’s Middleware business, I am the Senior Vice President, so I have got responsibility for all of our information management products, a lot of our Big Data products, our Big Insights and some of those things, DB2 and all the relational capability and technology is under me. Most of you know Websphere and all of the Websphere portfolio products I have responsibility for that, that also includes all of the mobility side responsibility across IBM for kind of our mobility strategy and so the products and services in mobility. We have got the traditional developer arena, what most people know is the rationale tools, and I will talk a little bit about kind of what we are doing there in support of some of the new stuff that’s going on.

All of the systems management and cloud-based technology most of you know it is typically is under my responsibility as well. And then there is a fifth group that we formed a year and a half ago and that’s security. We now have a security division and we formed the division when we acquired a company called the Q1 Labs. So overall, I have got responsibility for about two-thirds of the revenue that we have in software, which is $25 billion business for the IBM Company.

Question-and-Answer Session

Chris Whitmore - Deutsche Bank

So perhaps you can maybe help crystallize or help us understand where you see the most significant opportunities to grow the business over the next call it two to three years? Which of those product offerings are you most enthusiastic about and what are the drivers of that growth?

Robert LeBlanc

Well, I love all my children, because they are all playing in the growth areas in one form or the other. So when I look at it, I won’t look at the growth by kind of individual brand, I look at the growth in the kind of the broader market things that are going on. So as an example, cloud, everything we are doing we are focusing on cloud and actually it’s there, it’s taking some of our traditional Middleware products and exposing the capability that’s in the product as sets of services so that clients can access those services by the cloud without having to put maybe a database on premise, they can get at all the data services. So the client can acquire the capability in multiple ways. It’s really a delivery model. Do they want to do it on plan? Do they want to do it through a set of services that they host or that they host in the private cloud or that we host in a much more public cloud? So, cloud is a big area.

Mobile and mobile is having an effect on everything that we do from how do I manage the mobile device? So now all of a sudden I have got this mobile device connecting to my network. In the old days, I knew when you were connecting I knew the PC that was connecting, you probably connected through a private network, it was easy for me to control access, it was easy for me to control security. All of a sudden now everyone is coming in through mobile devices, multiple devices, and you are coming in through public networks or coming in through the public cloud and they are coming in, so how do I manage that and how do I manage the security that’s on the endpoint? How do I manage the data that’s on device, because that’s what everyone is taking mobile devices, and they are connecting to back end systems, they are taking data and that data in some cases is stored on that mobile device. So, mobility is a big area of security, is a big area for mobile.

I think you just saw that we acquired a company called Trusteer based out of Israel and they are really the leader in technology for mobile transactions. So, think of as consumer the business by transactions, most of the large banks here in the U.S. and in the UK use this technology to ensure a secure transaction. So when you are moving money to an account, you want to make sure that, that is the high transaction and it’s a secure transaction if you are moving money around. So now we have got technology that helps there and that will apply to all mobile kinds of transaction, not just banking type transaction, so we are pretty excited about that.

The third area is analytics, now with the smart devices and with things like location based services, I am gathering more and more information about what my perspective user is using. So, as an example if I am on your side and I am moving around from the various screens knowing what I am looking at is an important piece of information, because if I can look at that I can map it back, I can guide you through and I can put a special offer in place. So, taking analytics to understand what mobile users are using in analytics and building that into the application it’s on mobile is an other area of growth because Big Data is all about how do I get that information, how do I analyze the information and how do I get through a particular outcome. And in fact there is a survey that IBM did with Said University, Oxford - Said Business School in Oxford University. It talks about what the people are doing with the Big Data. Half of what people do is just trying to understand what their customers are doing. So, customers sentiment analytics and how do you build that right into the mobile device without having to have all of these separate products build it into app.

And then the last area is how do I build mobile applications, because when you look at what clients are having to do today, if you are building an application for a mobile device what device do you – what do you build it for? You have to build it for the iPhone. You have to build it for android. You’re probably still building for the blackberry and you are probably now – and you are probably building for Microsoft or Nokia or whatever the combination of the two is. And so remember in the days of servers when we went to Java it build ones run anywhere, but our clients are looking for help to be able to build the applications such that they can target the iPhone device, they can target the android. We are not having a unique application for every different combination and permutation, so we had acquired a company a year and a half ago called Worklight that really helps with that challenge in fact Gardner just put us on top of their magic quadrant in that area.

So the other area is how do I test, how do I virtually test an application that’s target for all these various devices from an iPhone to an android phone. And then how do I develop and manage the application life cycle from developing the app to moving the app into production to managing all the various releases of an application. I’d like to hear that how many of you have an iPhone or an android. Okay, how many of you download every single week, maybe even everyday, you push that button called update, what’s happening that’s an updated application and you do that almost on a weekly basis? Well, the old way of doing applications, I do have an application in every 18 months, so I would update the application I put a new release to the application, now you are literally doing it in weeks, maybe months, sometimes even days. So what is the development in lifecycle and we acquired a company called the UrbanCode to help of that development apps kind of lifecycle. So there is mobility is really opening up a lot of opportunity. And of course there is Big Data and I think we all know about Big Data. We all hear about Big Data. The press writes a lot about Big Data.

The Big Data phenomenon, it’s been around for a long time, it’s just that the number of data sources are starting to open up and the amount of unstructured data that’s being produced it’s far outweighing kind of traditional transactional data. But I am having now to marry those two together as a client to get more insight. The more data I have, the more analytics I can perform, so more patterns I see in the data the better I can serve my clients the better I can optimize my processes that run the business, the better I can see risk whether it be security risk or financial risk or fraud or any of the other things. So Big Data and how do I take data, how do I ingest the data, how do I cleanse the data, how do I look at the quality of the data, so I can make better business decisions whether its on business data, operational data, security data, so we are applying kind of analytics on all of those domains and so we’ve taken I think a big approach there.

This morning we announced a new appliance Hadoop appliance, so we have taken Hadoop and we have taken all the tools that are around Hadoop and we have integrated into an appliance. So now you are not having to integrate Hive and Pig and all those in sundry tools in Hadoop, it’s all pre-integrated in an appliance. Now, what you do is you worry about, okay, what are all your data sources plug in your data sources. Now, we can start to suck the data in and start to do your analysis. In fact we have got a spreadsheet like interface. So just like doing spreadsheets and connecting cells and everything else to make it much easier, because one of the challenges we have seen in Hadoop, it really you almost have to be like a PhD to be able to really get the value out of it. So we are trying to make it easier putting easier tools in the front end. Discovery tools are important. Most clients don’t know the tools or the data sources that they have inside never mind what’s happening outside, and being able to discover and connect to all of these various data sources is a big part of what’s happening in kind of the Big Data platform.

And then obviously the fourth element is social, and you see social just exploding. And social, not just in terms of the consumer, when we think social everything thinks Twitter and Instagram and Facebook and all the in sundry social environments, we have seen an explosion in clients using social to connect their businesses. And we have a product called Connections, which is the leader in the market and that enables you to connect your company. In fact, we use that inside IBM to try and connect the 400,000 plus employees inside the IBM Company, so you could share ideas, you could share information. When you talk to most clients, they will tell you they have got more information that they know what to do with, and they struggle with getting the information or connecting the right people to the right opportunity.

So as an example, we have an internal application, it’s a mobile application and it’s called the expertise locator. And anyone in the IBM Company from anywhere on their mobile device can connect and say I am looking for an expert on Hadoop, and up will come a list of all the experts in the IBM Company around Hadoop where they are, their experiences, what clients they have dealt with, what practical deployment experience they have, whether they are strategists, a deployment expert, a technologist. And so instantly you are starting to open up the ability to bring anyone into an engagement. So, it’s no longer who I have in my particular location or geographic or industry I have opened up for whole IBM Company. So that’s one way we are using kind of the social aspects of connecting an organization, and there is a lot of large organizations now we are paying particular attention, especially if you are a large organization, if you can connect your people, you are going to come up with better ideas. So there is a couple…

Chris Whitmore - Deutsche Bank

Yes, couple of broad strokes here, one I wanted to ask about a bit more in detail is cloud and how cloud impacts IBM’s business over time? I think there is a lot of debate in the marketplace as to whether migration to cloud and infrastructure is particularly public clouds is a good thing or a bad thing for IBM. So can you perhaps maybe elaborate on your position in the cloud? How you are helping customers migrate to the cloud and how that flows through to business model impacts?

Robert LeBlanc

Well, if you look at the cloud and depending on, if you layer the way most of the industries layering the cloud, there is the infrastructure layer and that’s really how do I use up all the resources I have from compute to storage to networking and how do I provide a shared environment such that I don’t have to put on PRAM, I can go out to a public cloud, I can put my application on it. And you know what I will run it “out on the cloud.” We acquired SoftLayer in that space and SoftLayer has some really industry leading set of capabilities. They have got over 1600 services that are on the platform that allows people to build their next generation applications or move applications. Most of the time, people will make a decision to build new applications on the cloud. Some people move applications on the cloud, but it’s hard to move an application that was built for kind of a server environment, because you got to re-architect and rebuild the applications on client to do that if they see true value in doing that.

You move up to next layer kind of the PAAS layer or the platform-as-a-service layer and what we are doing is we are exposing majority of our capability as a set of services. So I can get services. An example there is Mongo DB service out there for no sequel. We have got a service that actually you can go in throughout that interface and it back ends to a DB2 database. So that database can be out on public cloud, that database can be back ended into a private cloud. Most of what we are seeing is very hybrid in nature. And what the clients are doing is they are really looking at their business processes and they say well, you know what, I have got this thing called sales automation or sales management process. Is that process unique to my business? Is that something that I have to run? No, I can probably go out and get a public service. So, sales force is the one that comes to mind. So, you know what I may have that.

Well, I’ve got back in transactional systems where I have all my customer data and that’s where my billing system is connected and everything else, so am I going to throw all of that on the cloud, you will only if you see value in doing that I will probably have an internal cloud and then I’m going to connect these processes that are external process to internal processes. And that may be for data reasons, compliance, security, so what we are seeing in most cases it’s really a hybrid world, it’s not, let’s all go do a logical shift and I was trying analogy to what happened in client server, when client server happened, the server business increased although a lot of processing went out to the client the servers changed what they did and actually we grew as well because there was more innovation happening in the front end, there was more innovation in applications. Well, the same thing is happening here in cloud, a lot of cloud is actually being driven by mobile.

When you think about all of these devices that are out there and all the services and in fact SoftLayer mostly used Tumblr or TwitPic all of the – lot of those are hosted on the SoftLayer environment today. In a lot of cases they are going to have to connect to backend systems where the data is where the transactional systems are billing systems and the like. The banks are a great example. Some of the applications are mobile that are out in the cloud but a lot of the base transactional systems are in the backend and they are seeing an increase in the usage. People go, well that’s move all, no one will do anything in the backend or do it in the front end, front office, back office kind of that. Well, think about it how many of you paid your iPhone, your android deposit check, I know I do that, I never go to a branch I deposit checks. Well, you deposit the check, there was additional processing that needs to happen because I’ve got to secure the transaction because of due to cloud it goes into a backend system that does the deposit in the bank. Well, if you think if you would deposit you are probably looking at your bank balance, hey did that check clear an hour later you log-on you say did that check cleared what’s my balance, my bank today.

In the old days you wait until you got your physical statement to see what checks cleared, when did they clear? Now people check their accounts everyday and guess what that drives a lot more backend transactions especially queries because the number of queries that are going on is going up are exponentially and therefore I need to compute power and I need the networking and I need the storage to store all that information. So, all boats are rising and a lot of innovation in the front end and cloud our mobile is driving more and more cloud instantiations and that’s driving even more opportunity here for the infrastructure.

And then at the top layer the SaaS layer which everyone thinks when they think the cloud, you think of really SaaS type applications I can get access to an application on the cloud, I don’t have to install it, I just connect to it, well, that’s driving need for additional security, it’s driving need for additional access management, identify management, so there is a whole set of new capabilities that are required even when you go put out in SaaS. And we’ve got over 80 SaaS applications in IBM, most people don’t know that we’ve got a many SaaS applications and lot of the vendors out there and we’ve acquired companies like the Mantech and Coremetrics, that’s how you get us the capability at the service it is a SaaS application, you get out on the cloud.

So for us, cloud, we play at every layer, most of the players should one layer. So when you think of infrastructure we know who we all think of VA companies, right. So we’ve got capability we think SoftLayer is a superior capability to the other players out there, but we also played in the middle layer the path layer and we also play up in the SaaS layer and we’re going to play at all layers and we are going to expose more and more of our services and capability through all of those layers, so that’s kind of how we see the cloud. So we think the cloud is the rising all books.

Chris Whitmore - Deutsche Bank

So just a follow-up on that, how do you – how does SoftLayer better positioned you need to grow within the cloud what does you need to do that acquisition. And then secondly how does IBM interoperate with other public clouds that are offering and delivery service today, how do you manage those other relationships?

Robert LeBlanc

Okay. If you look at SoftLayer they’ve got over 1,600 services so they have the most robust set of services out of any of the providers in the space. And so when we looked at that we said well they really have a set of capability here had a second to none that enables enterprise class applications to go out on the cloud because when you talk about the enterprise you got to have capability like security and backup and recovery and service levels everything else. And they’ve got lot of that backed in. They also have a set of technology underneath that enables him to manage kind of in the (indiscernible) operations among 13 datacenters and what everything is automated. So from Tumblr and all of a sudden something happened and there is peak and the amount of connections I have to manage coming from mobile devices and they’ve got technology that senses that and automatically provision to server or so on that Tumblr I don’t want to log-on and request more capacity, right. Because it senses it and it does in a automated way and lot of the other players you actually don’t have that level of automation. And so with all those surfaces they already have it’s easier for us to build the next level of services around analytics and everything else that really is our sweet spot. Okay and some of the unique capability, we’ve got its now easier for us to build on top and now we’ve got the SoftLayer build to build on top of and we think that will help us accelerate some of the other thing if you are doing in the software business.

Chris Whitmore - Deutsche Bank

Maybe at this time I will just point out to everybody you can – if you want to ask a question and are shy with the microphone there is a system here to insert questions, if you want to do that. Also there is a mic around so at anytime if you want to ask the question please raise your hand, I will get to you. One, moving on to Big Data and Big Data and analytics is probably among the getting most attention out there in the marketplace is at least from the media. Can you help us understand how your customers are thinking about Big Data, have they apply Big Data to their existing environments or opportunities and what is the opportunities set there for IBM how do you play in Big Data?

Robert LeBlanc

Well, when you think about Big Data, we like to think about it in terms of four Vs volumes when everything is Big Data, I think Big Data is a lot of data. And all of a sudden now clients are saying well I don’t have to worry just about the data I have in my own organization, i.e. sitting in traditional things like data warehouses and databases and so like I got all this other unstructured data. And 50% of the clients that look at Big Data, look at this is an opportunity to get better understanding of what their clients wants, need are and really get closer to clients so that they can build better products and services that meet clients. This whole nirvana of every single person is unique and I can market the individuals rather than market to generic markets.

Okay, so I’ve got to be able – I want to be able to take all that unstructured data, I want to merry it up with my transactional systems, with my inventory systems so that I can optimize. So the second layer is how can I change the optimization, because what if I can improve my inventory turn, if I can come up with an end to end process is more optimized. I can probably save the company money, I can build products faster, I can get them to market faster. And then the third one that use Big Data for is to manage risk and risk and fraud. As an example, when we acquired to Q1 Labs for security, the difference that we have is most clients have 15 plus, in fact I saw one client 65 different security product and they say man I am secured. Well, each one of those products do one particular thing and no one was looking across. And so everyone of those products produces information, they produce logs. So, what we do is we take the logs and we look for patterns that are not seen before.

So when you see a peculiar pattern in your network data, you see a particular pattern in data access or location you probably you could be under attack, because this persistent threat that’s going on is most threats today are not frontal attacks. You don’t hear as much about frontal attacks anymore what happens is they get in they put some through an email or whatever they put one piece of code and there are some other server piece of code. And over period of time, you know what they are laying all the pieces for a much broader attack. There is no – typically no single product can identify all of those threats, so you want to correlate them together you want to analyze and predict them guess what it’s a traditional Big Data problem. In fact, there is more security data produced and there is business data and so we provide the Big Data the security, does want to apply Big Data to operations, think of all the – all the IT that we have in this industry trillions of dollars spent on IT and that and if we could get much more effective and efficient and that’s what the card was all about let me share resources I can put on the cloud. I don’t have to have worry about spikes in my utilization, I can use resources they only pay for what I need. Well, guess what all of that’s producing data and if I can take all of that information that data and I can better predict what’s going to happen, I can produce – I can move more close around, I can move the resources around to optimize. So you are seeing optimization kind of in that aspect. So clients are all looking at how do I take information and change the outcome whether it’s a business outcome, a risk fraud outcome, an operational outcome they are trying to say, how do I take information, how do I analyze and how do I produce a better outcome.

Chris Whitmore - Deutsche Bank

We want to take a question from our system here, so the question from the audience, how do you see public and private cloud, the competitive landscape here evolving in the next few years, can you provide a view on competition premium is on an some color around the CIA deal?

Robert LeBlanc

Yeah, I want to talk about public and private cloud, I think the world is going to be much more hybrid. There are certain processes that lend themselves to go out to the public cloud and is going to be certain processes that lend themselves to be in the private cloud. You are going to be in the private cloud, because you got regulatory requirements right. You are going to have security requirements as an example, if you in healthcare, and you have to adhere to hip up, you can’t go out to some of these public clouds because they don’t support HIPAA, Amazon does not support HIPAA. We can support HIPAA, a software as they can support software, now there is a compliance, so you don’t have a choice but to run some of that process internally. If I am running HR, it is easy to go out and run it as a service and, we've made acquisition that prior connects it to help with kind of real talent management in some of the HR functions. Because that function is probably not going to differentiate yourself. If you're in investment house and you've got some algorithms to do derivatives, that’s unique, okay and proprietary, you probably going to run that in your private cloud, you won't run that out in the public cloud, right. And guess what so therefore you're going to combine public and private cloud and much more of a hybrid depending on the process and we got capability to help you manage that connection between hybrid – or between public and private, because you got to worry about data transformation and security and connections and all of that kind stuff and you want to automate that. And so we've got products like our cash line products in WebSphere that helps you manage that kind of online. The CIA I am not going to comment obviously on some that situation that you read in the press, and that’s under, the government's review now. So I am not going to comment on that.

Chris Whitmore - Deutsche Bank

Second one from the audience through the system is around OpenStack. So how do you view the direction of OpenStack versus VMware hybrid cloud deployments, where does IBM stand in, I know where you stand but can you maybe elaborate on kind of your commitment to OpenStack?

Robert LeBlanc

Well look, we have been very public on this. And we are one of the founding members of OpenStack. We view being in an open world is really important, the last thing you want to do is you want to be tied in to a particular vendor, a particular technology that doesn’t give you flexibility because part of the challenge we have today even in the cloud, we think of the cloud as being standard, I have got a virtual machine that runs you know like virtual machine is different for all of the various environment. So it’s hard for me to work move work around. I can move work around within an environment like VMware if I want to move it to KVM or some of the other platforms it’s very, very difficult, it actually takes reengineering to do that and transformation to do that.

So we believe as you can get to OpenStack and you get to a standard set of open technolgies and APIs that is going to be easier to move workloads and if I can more workloads around therefore I can decide based on service, quality or any of the other realities that I am going to use vendor A and then you know what I am not happy with vendor A, I can move it all over to voice. So when you commit to OpenStack there is two things you can do, you can be one of, I think there is 400 in our people that are part of OpenStack but what’s important in an open environment is that you are a contributor, okay and we are one in the top three contributors of OpenStack which means we get hundreds of dedicated engineers who are producing code and were putting in an OpenStack because there is two kinds of standards body there is those standard bodies that do what I will call APIs define the specification and then everyone can do their own implementation and then there is standard bodies that do specification and deployment. So they have a reference deployment, reference code that everyone can take and everyone can deploy. That’s really good the tact that open stack has taken, and that’s when that we really, really like. So I've got hundreds of developers who are contributing today to open stack. So we're putting more and more technology into open stack to get that, common, platform that will allow a truly open cloud, not proprietary stacks depending on if you pick vendor A or vendor B or vendor C.

Chris Whitmore - Deutsche Bank

And just to follow on upon that, the underlying philosophy is that and open cloud will accelerate the deployment to cloud and you hope to benefit from that by selling other infrastructure and other tools in and around OpenStack?

Robert LeBlanc

Yes, if clients can speed up their innovation and speed up their ability to deliver and we know all clients would tell you they are way behind in deploying and delivering the capabilities of services and the software that’s being demanded by their businesses. I have never met a CIO that said they are waiting around because they don’t have anything to do. Okay, so if we can accelerate that, that’s going to accelerate new innovation, new products, new services that is going to drive much more requirement for IT and all the boats are going to rise like a rising tide, and so the more I am doing, the more infrastructure I am going to need, so the more hardware and the more networking the more software and more Middleware and more services then. So, we are trying to make it easy for clients to innovate. They can innovate much faster guess what like an inventory turn in retail. If I can get more inventory turn, I can sell more products, right, and that’s really that simple.

Chris Whitmore - Deutsche Bank

I am going to ask another one from the system here. On the top of the Big Data, how do you evaluate a buy versus build strategy with respect to IP? Are there areas that you feel like you may have the deficiencies such as areas like log analytics, visualization or Hadoop integration, for example, are there any particular technologies that you are looking to still understand?

Robert LeBlanc

Well, Hadoop, we take Hadoop, we got Hadoop distribution. We integrated with our big insights products and now we have got an integrated appliance with Hadoop. I don’t have – I got a standalone Hadoop distribution that you get for free, but Hadoop has just a standalone piece of code, it’s not sufficient most enterprise clients. So, what we try to do is build around it, build out the tools, make it easier to build, manage, to manage the clusters and that capability. And what we do in our acquisitions that we strategically look at a particular market, maybe an adjacent market maybe a market that we are already in and we are always assessing what is the start of the art, what is the value you can bring to clients. And we assess it that way and then we will take a look at our own technology and we will take a look at what technologies available in the market and then we make the build versus buy. So, we don’t look at companies and say well, there is a cool company well, let’s go buy that company. We start the other way around. We start from a strategic view and say we want this capability. Then we will look at the market and say okay, who are the players in the market?

And then we will assess them around a set of dimensions, financial dimensions is one, but what’s even more important is technology and cultural fit. And we have been very successful in our acquisitions more so than I would contend any of my competitors as we pay attention to also the people side of it, because we are especially in software. When you acquire, you are acquiring the intellectual IP that’s sitting in people’s head, their ideas, their understanding, their experiences, their knowledge and so we spend a lot of time making sure there is a cultural fit. Because if I acquire a company and it is not a cultural fit and half of the team walks out, what have I bought, in software you haven’t bought much.

So, we pay attention to those kinds of things, and then we narrow it down to the top three and then we'll sit down with the top three firms, we'll have a discussion and we'll see if it gets, we'll also take a look at technology fit, because the worst thing you can do is not integrate. So, we take a look at technology just give you an example for the .NET application, it’s probably not going to fit in our infrastructure, because everything we have got is Java, J2EE, and I want to integrate. That’s one of the things that customers, it’s a value for the customers that integration of the pieces. And so we pay attention to all of those. So, is there any, I am not going to tell you all, yes, here is one piece, here is one piece there, one piece there. I think that we have got the broadest, most comprehensive Big Data platform in the industry are the areas that I am going to beef up absolutely. And if you look at history, we have spent over $15 billion in acquisitions and the “analytics in Big Data space” and so that is an area of focus for the IBM Company obviously.

Chris Whitmore - Deutsche Bank

So, just quickly we are running out of time here, but just quickly another question from the field that run the Hadoop clients, just trying to give a little bit of color as to where does that fit in the marketplace to what extent does Hadoop compete with folks like Teradata etcetera what’s the competitive landscape look like in that sub-segment on the marketplace, what extent does Hadoop put pressure or cannibalize your traditional database business.

Robert LeBlanc

Well, if you look at I will start backwards Hadoop and traditional database. Hadoop doesn’t do a lot of things that a traditional database system does they are complementary they are not one or the other. And in fact the most advanced kind of architectures the client have, they got both. They will use it do it upfront, they will bring in a lot of unstructured data, they will do the preprocessing of the data, they will do some of the basic analytics and then though take that data and they will move it into a more traditional kind of analytic zone and that could be in a data warehouse or any other of the other tools that they use. So, they may use Hadoop to produce data that they will then store and Teradata or (indiscernible) and then do steeper analytics on the data. Because remember you got so much of data coming, you’ve got to be able to cleanse the data and determine which data is good data what’s bad data, because that lasts the veracity is really important because if you make decisions on that data you’re probably going to make a bad decision. So, we look at them as combination of both, but if you look at the Hadoop and kind of reading that you buy Hadoop and then you probably will install 15 or 20 other tools around it with great names like Hive and Pig and all these other standard things.

Well, some of the visualization discovery tools, query tools, need really beating up and so we’re doing is that’s where we are investing and we are integrating all of those tools around Hadoop cluster, so that you can get up in running very quickly and you are not having install all these individual tools, which is pretty complex and the one thing we see a lot of clients they don’t have that kind of skill. They may have one or two people that are experts, but outside of a couple of clients there really isn’t enough skill out there. So, we are trying to do is lower the skill barrier, but skill produce the capability that enables them to start to take in unstructured data and do that next generation of analytics of Big Data.

Chris Whitmore - Deutsche Bank

Unfortunately we’ve gone over our time limit. Robert, thank you very much.

Robert LeBlanc - Senior Vice President, Middleware Software

Okay, thank you.

Chris Whitmore - Deutsche Bank

Thanks.

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Source: International Business Machines' Management Presents at Deutsche Bank dbAccess Technology Conference (Transcript)
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