Navigating through Uncharted Territory with CloudBlue VP Tarik Faouzi and IBM Director Rose Nuñez

Hello everyone. Good morning, good afternoon, good evening, wherever you are around the world. Welcome to this session, The Future of Cloud: Navigating to Uncharted Territory. We will be presenting today with Rose. Rose, if you'd like to introduce yourself.

Sure. Hello everyone. I'm Rose Nunez, part of the IBM Partner Ecosystem team, and I'm absolutely thrilled to be here with you today.

Thank you, Rose, and thank you for joining me during this presentation. So my name is Tariq Fauzy. As you can recognize with my accent, I have this thick French accent when I speak English. I'm the head of CloudBlue. CloudBlue is a commerce software— is a commerce software company, and we mainly sell our solution to service providers. So let's jump in and let's talk about those uncharted territory. What are we talking about? First of all, I would like to talk a little bit about velocitization. Velocitization is a concept I've talked about a couple years ago. I think many of you are very familiar with this concept, and obviously it has to do with speed. Imagine you are on this comfortable car, this very powerful car, you are driving on a highway, and suddenly you realize that you are far over the speed limit. This is what we call velocitization, when the speed of change is so fast that you not realize that it has already changed. So this brought a couple of, of challenges. Obviously challenges and trends that I'm going to be talking about. But I think that a good example of this velocization is this COVID-19 and what we see happening today in this era of COVID-19. We see now manufacturers like auto manufacturers, especially here in Europe, that have decided to send all their white-collar to work from home as a definite solution. Who would have thought that, that a manufacturer would send its employees working from home as a definite solution? This is the type of velocization, this is the type of change that we are seeing today in our world, and we need to understand how do we adapt to those changes. So let me go to a couple of trends. The first trends I would like to go through is the rise of marketplace proliferation. What do I mean by the rise of marketplace proliferation? 30 years ago, In order to bring a solution, a software, a product to market, the road to market were pretty straightforward. You were going to a store or to a distribution, to a channel. With the rise of internet and the democratization, the commoditization of internet, we have seen all those marketplaces popping up and we have seen new channel being developed. Mainly direct, where we have seen consumption of software and product happening online as a new channel. With the cloud, we have seen this acceleration of those marketplaces where you need to have your product in order to be able to sell. Lot of factors have driven to this proliferation. Obviously, the cloud, the technology, but legislation. Regional legislation, like for example in Europe the GDPR, that has forced the point of consumption to be within the European Union. This point of consumption cannot be outside. Enterprise have digitalized, have embraced digitalization, are using software that today, through which they want to consume and procure all their access need. All of that has created this massive proliferation of marketplaces and have brought many challenges. Challenges around API integration, challenges around how do you maintain all those integration points across all those marketplaces, because if you want to do business, you need to have your product, your offering, closer to the customers, and meaning on all those existing marketplaces. So this is a major challenge that IP owners in general are going to. Another challenge to that is that it is costing. This has a cost, and usually this cost is taken out of the funding. If we think about startup, you have to take out of your funding— instead of dedicated your funding on developing your product, making your product better, you have to dedicate more and more of your funding in making your product available through those channels. As obviously, the first road to market is a direct road to market, but when it's time to scale, you have to have this presence on all those marketplaces. So if you think about it, Rose, what is IBM seeing in terms of this market trend, marketplace proliferation, and the rise of the API economy?

Sure, thanks, Drake. To that point, The ecosystem is definitely, you know, absolutely playing a more critical role now more than ever. And the role of the ecosystem player has evolved into what I would call delivering the digitally connected ecosystem. And at its core, to precisely to what you were saying, our clients, our ecosystem, they are really, really expecting a modern retail-like experience in their B2B engagements, similar to the way they have that same experience, same engagement in B2C. And what I really want to address is, you know, to facilitate that, what's happening in the ecosystem today. And, you know, historically, our ecosystem, our partners, our channel, you know, it was thought to be more logistical in nature. And now channels have created, you know, truly enriched e-commerce engines that are much, much more than an internet page. They have benefits like auto-provisioning, capabilities, which is a fancy way to say quick delivery, subscription, billing, user management, all of which are there to truly, truly enhance the client engagement, the way the client manages their consumption. But in addition to that, it really removes a lot of the barriers of the broader ecosystem and helps them focus truly on the client engagement and really facilitating that trusted advisor role that our ecosystem partners play. Overall, as a vendor, what's critical, back to what you were saying, is that, you know, the vendor really has to truly step up, excuse me, and provide the offering API. And so, what is this, the offering API, and what is the vendor providing to bring their offering closer to the client? The offering API is really the way, it's the modern way that the vendor to distributor communication takes place. And all of this really, really helps move us away from an archaic kind of process-centric model into a client-centric model. So all of this together, so the client expectation to these e-commerce engines to the vendor API, all of this together creates that digitally connected ecosystem, making it seamless from client to the ecosystem partner to the distributor to the vendor.

Right, thank you, Rose. Now let's move to the second trend, a system of increasing interdependency. What am I talking about here? So with the rise of internet, the cloud, the acceleration of the technology, what we have seen is that we have seen a dramatic increase in number of offering ISVs. We have seen numbers: 175,000, 180,000. People are talking about a million ISVs in maybe in 10 years from now with IoT and the acceleration of IoT and the adoption of IoT. This has created an environment where we are all interdependent. It is very hard in today's environment from an IP owner, an ISV, to raise above the ground, to raise a stand above the ground. We need to use others in order to develop our road to market, which has changed, has morphed completely the way the channel, for example, is structured. As I mentioned earlier, until a couple years ago, the way to go to market was direct, one tier, 2-tier, in some cases 3-tier, depending on the country's specificity. What we have seen now is that the straightforward channel and road to market has morphed into a channel ecosystem, creating this interdependency. So we have seen, for example, ISVs selling to ISVs, ISVs selling to MSPs, MSPs becoming ISVs and selling to ISVs. So we have seen all those interdependent channels created in this ecosystem of interdependency that we cannot ignore. This has made the road to market much, much more complicated, much costly, because you need to be able to play in all of those channels in order to have the appropriate presence. The proliferation of ISVs and startups and solutions has dramatically increased the cost, the marketing cost, the digital cost, the digital cost of marketing your product, your offering. How do you raise? Again, by using those channels that exist, this ecosystem of channels, this is a way to better market yourself at a more affordable cost. And we have seen many, many success. And this is why we see now, and we have seen in 4 or 5 years ago, a lot of IP owners, ISVs, joining ecosystem of those large vendors, established vendors, Salesforce, for example, IBM, many, Microsoft, many of those, and develop a technology that is complementary in order to use those main vendors as a vehicle to go to market in order to leverage those vendors, to leverage their channel as a way to be able to scale. Because you can start in the direct motion, but the direct motion only gets you to a certain point. There, you're gonna have to scale. How do you do that? You leverage those ecosystems, you leverage the integration of your IP, of your value, into others in order to build this solution that the market wants to buy. Today, the market wants to buy a solution, they do not want to buy individual products. And this is what I mean by this system of increasing interdependency. COVID-19 has further exacerbated this trend. We all know, as we had to go back home, that what do we need? We needed a solution, but a solution that went beyond software. We needed desktop, we needed screen, printers, we needed SaaS, we needed a set of items, services, product, physical, virtual, in order to be able to continue our work. So everyone was looking for this kind of solution, and this can further increase this interdependency. Rose, On this topic, what has IBM experienced in this new system of interdependency? Where is IBM in their channel journey?

Sure. So the IBM Builders, or ISVs, the ecosystem was historically focused on creating on-premise solutions. So to what you're saying, the acceleration into cloud or into digital, we're definitely seeing an accelerated expansion into cloud-based solutions, as well as into managed services. And a lot of our ISV and builder ecosystem is really out there to address— and this evolution is occurring to really address the client needs across a variety of different solution verticals, industry verticals. So it's all in the name of the client, I would say. The ISVs are looking to IBM to really enhance or infuse their solutions with cloud, cognitive and AI capabilities without having to develop these things from scratch. So this allows them faster time to market. They're not having to develop end-to-end, and they're coming to IBM to really, really enhance the products, whether they be existing products that they have that they really, really want to bring to the next level, or whether they're trying to build brand new from scratch. They're really looking to IBM for those cloud cognitive and AI infusion to enhance that product. And I did want to mention, in addition to what you were mentioning about the COVID-19 pandemic, it's really stress-tested the digital transformation of many companies. And it's really accelerated as well the digital models for many companies. Right now, cash flow is top of mind. Access to capital is top of mind. However, the IT needs of our clients hasn't disappeared. There's still— IT needs are still at top of mind. Mind, and it's not just what were the existing IT needs, but there are new requirements and new needs that are coming to life. And our builder ecosystem is really relying on IBM for that secret ingredient to really enhance their IP and really, really differentiate themselves in the market.

Thank you, Rose. We could not agree more. I'm glad that we are seeing the market the same way. On the last trend I'm going to talk about today is the subscription model is no longer enough. What is behind? We all know, couple years ago, and Adobe was one of those precursor of the subscription economy, more and more IP, ISVs, vendors, went down the path on the subscription, and we see this acceleration, and that was the expectation to consume product at the time under a subscription model. But to come back to some of the points I've made earlier, this is no longer enough. Customers want to consume a solution. They do not want to have to buy different products under different subscriptions. They want to buy bundle, what we call bundle or solutions. And this is really in great, great correlation with this interdependency that I was talking about and those marketplace proliferation. It's a way for us again to be able to scale in this world of increased competition. What we see more and more, and I can see with our customer, my customers, they are more and more looking at capabilities that enable them to create those solutions. Either they want you to— they want us to bring them an in-the-box solution that is easy for them to market, or they want to have a system that can allow them to take the different product and offering of this excess economy and bundle them together and offer them under one price one order, one environment where to manage this solution. The piecemeal approach is no longer what is needed. What is needed are the solutions. So from IBM point of view, Rose, what is IBM doing to move beyond the subscription model and into solutioning?

So I think there's really 3 key things that we're focused on. You know, of course, at the foundation to what we were mentioning earlier, digital transformation and the digitally connected ecosystem. At the foundational, fundamental level, we have to provide a way in which to facilitate the digitally connected ecosystem to move from process-centric to client-centric. Again, focusing strictly, strictly on the client is the core reason for this engagement. To what you're mentioning, digital transformation is around making sure that we engage from an API perspective, leveraging this API economy into the digital platforms, into these in- enriched e-commerce engines. Second thing is the focus on the partner as both a trusted advisor, as well as a solution builder to answer the client needs and meet these new requirements and new needs that are coming to life in the existing environment. Absolutely critical. So, you know, our focus as a vendor is looking at the skills, the skills of our partners, as well as making sure they have the tools that they need, whether that be code patterns, right? So providing access to code, making things simple, use cases, and really enabling that developer conversation. And again, really enabling the trusted advisor position that many of our partners play, and critical, critical and valued role to our clients. And then lastly, but not least and most important, is focusing on our client needs. You know, what, what is happening in the market today with regard to the digital transformation, digital disruption, digital accelerated models, whatever you want to call it. There's key things that are happening in the market, and we really want to be there to help bridge our clients into app modernization, the requests for app modernization, the requests around moving to the cloud, the requests around securing, securing my content, moving to the cloud, new and emerging things, as I was mentioning, not just securing cloud or securing my content, but how do I secure my remote workforce? To what you were saying. It's a different environment now. And we're definitely here to work with our ecosystem partners and to really, really focus on the business outcomes of our clients and really, really help them bridge in this time where these new requirements are coming at them. And they're looking to the trusted advisors. They're looking to an easy way to facilitate these discussions and acquire content and get our content as close to the client as possible.

Thank you, Rose. So, as I mentioned at the beginning of our presentation, we are in an era of velocitization. Velocitization isn't inherently bad. It might just be the new speed of business, but you have to be agile and you have to be in control. So to wrap up, we hope you can come away with 3 top takeaways. Velocitization is resulting in the rise of marketplace proliferation. Choose a long-term marketplace partner. Digitize your channel sales motion through APIs. It is also resulting in a system of increasing interdependency. Make sure to develop your channel, make sure to develop your channel engagement. And lastly, the subscription model is no longer enough. Having a subscription is a table stake now, You need to go beyond subscription, you need to go into solution. Thank you very much, everyone. It was a pleasure presenting to you today. And we're going to open for any question. Rose, you want the last word to conclude?

No, I definitely echo Tariq, all of the thoughts here. I again, welcome everyone to reach out if they have additional questions as well. I know we're going into Q&A now, but absolutely. Absolutely thrilled to, to have the discussion and definitely encourage the conversation around the needs, especially in the current time, as many of our clients' needs are changing. And we are at time, so thank you both so much. And attendees, please do reach out to Rose and Tariq if you have any further questions. Thank you. Thank you so much.

Thank you everyone. Bye-bye. Have a good day.