Here we are in LV Las Vegas at the IBM Tivoli Pulse 2009 conference. We've got two more special guests with us. Would you guys like to introduce yourselves? Sure. I'm Gaston Sandoval. I run Service Management Industry Marketing and I'm very excited because probably you heard a lot about our industry solutions, so I'd love to talk a little bit about that. Absolutely. And yourself? Yes, I'm Dave Bartlett, Vice President of Tivoli Industry Solutions. So first off, since we've got both of you guys here, can you tell us what the industry solutions are and how they fit into the Tivoli world? I like to call it the age of convergence, where we've moved from IT being dynamically addressable, IP addressable, to much of the enterprise. As things become IP addressable, RFID tagged, we begin to build intelligent plant floors, intelligent smart oil fields, intelligent utilities. And so that's all about being able to dynamically address them and understand the current state and act on that. And that's what Tivoli's great at. That's our value proposition, to be able to, the real-time monitoring, collection of events, persisting them end-to-end. And then with that end-to-end visibility, putting the right control and automation place to lower cost, provide better service. So we've been working in a number of industries to begin with, retail industry or intelligent retail systems. We've been working in the utility industry, so there's all about smart grids or intelligent utility networks. We've been working in chemical and petroleum, smart oil fields, everything from offshore platforming to the refineries of the future. In simple terms, what we're doing is applying the same service management principles that you can see in a data center to the enterprise side of the house. Right. It's really trying to look at the infrastructure end-to-end, physical and IT, in the context of the services that those industries, those clients, deliver to either their consumers or their own customers.
2:10So that's really the net of what we're trying to do. So when you start to think about the recent announcements around Smarter Planet that our chairman made in November, we are at the core of that value proposition. You know, really trying to enable business transformation, you know, with a more flexible management of these infrastructures. I always understand things sort of from the bottom up, if you will. Yeah. And you started out explaining something that I thought was a very bottom-up way of saying that is all these things are IP addressable, or a lot more things are. And, I mean, I suppose you could, you know, they have to be on some sort of network. You can't sort of, like, have a smart pencil that you can manage somehow. It doesn't really have any way to interact with it. But is that sort of the thing that sort of makes this possible, is that in the overblown sense of the phrasing, everything is on the network now, or more and more things are on the network? Well, that's one way to look at it. So the example, you know, everybody can relate to utilities because everyone has to pay an electric bill. And, you know, we remember the days when the guy knocked on the door to read your electric meter, and then they went to second-generation meters where they could do it remotely, maybe from the curb or something. But the third-generation meters, or the advanced metering infrastructures available now, is actually IP addressable. Well, if it's IP addressable, then you can do wireless transmission, and there's a number of different ways to do that. There's the ZigBee protocol for wireless transmission, but you can backbone on a service provider like AT&T, and all of a sudden be monitoring your whole network of metering. Now, that's not just for reading meters. You can pull it to understand the current state. If there's an outage, you can understand that immediately. If someone's tampered with a meter, you can understand that immediately. So it's much like managing a network. I remember at, I think it was the Software Analyst Summit, there was a demonstration with one of the labs in France where a guy, he was hamming it up pretty much.
4:10But, you know, he's like, now I'm a criminal, and he went and, like, you know, put a hammer on a meter or something. Yeah, it was great because everything was still, and everybody just thought it was a PowerPoint slide, and all of a sudden this guy waltzes into the middle of the PowerPoint slide and rips the cover of the meter off. But, you know, the type of technology we have in Tivoli, we can immediately detect that. And you can build automation in there for reoccurring events, or you can generate an alert to the operator. But that's what we mean by, it's an example of intelligent infrastructure. I mean, everybody says smart grid. Well, what is smart, you know, electric grid? It's taking everything from generation to transmission and distribution of electricity and being able to monitor it real time by making it addressable. And how does that apply to the other verticals like retail or finance and chemical and petroleum? I mean, I imagine their concerns are a little different, even though they may have the same sort of network that you guys can draw from. Well, what's so cool about working in the industry is, of course, each industry has different pain points and different terminology and different issues, but it's basically the same convergence play occurring. So if you go out to an oil platform, they've already got systems just like utilities are putting in smart meters, there's a way for them to wait for them to monitor pumps, separators, the critical componentry of a platform. A lot of platforms have refineries right on the platform. So what do you do with that information? We can actually monitor that and understand events coming from things like separators and by comparing against the operational specifications what vibrational frequencies are occurring or what level of heat dissipation is occurring. Say, this thing's about to break or will need to be replaced within the next X number of days.
6:14So you can do that proactively instead of waiting for it to break. So it's all about taking the important assets on a platform, for instance, and bringing it real-time and managing it real-time much the way we do an IT set of assets. Right. Yeah, as you guys were saying earlier, you're taking this sort of basic instrumentation and doing something with that data and extending it to the rest of the enterprise, not just in the data center there. Right, and there's all kinds of levels. There's the operational level on the platform. There's the higher-level dashboard view that you can do everything from executive decision-making in terms of availability of multiple platforms, visibility of more of the oil field, to the type of business intelligence, Cognos-related research in terms of everything you're getting. So let's do some forecasting. To that point of not only you have the instrumentation and the gathering and paying attention to events, but it sounds like there's a lot of advantage the more real-time data analysis you can start doing is when things start to get interesting, like by using Cognos and things like that. And so I wonder what the stack for this stuff looks like. I mean, what are the different components that end up being in the stack, the boxes and the arrows that connect them all together? I have some great charts I could share with you. We are a group of architects that do this, so you can imagine we've got the architecture laid out. But, you know, one of the foundational parameters of our work, let's say, that I gave to the team was don't go off and customize and create something new. Your building blocks are the technologies that exist in the IBM portfolio and Tilly's portfolio and our software group portfolio and our business partner portfolio. Let's see how we can apply those technologies as they exist today against this industry space as it becomes digitalized, as it becomes aware or dynamically addressable. And that's, it sounds like an obvious thing to do, but we're technologists
8:17and we love to get in there and play and customize and do one-offs. Right, making a new thing is always exciting and fun, right? Right, right. But this is all about leveraging technology that we've got that's really proven and applying it to industry to bring value in a way that's repeatable, that's maintainable, that's sustainable as we move forward. What's amazing to me as we've begun to do this work is how relevant the current technology is in the space, the immediate value that we can bring to bear by using technology. We don't have to invent something new. It's about applying it in a space that it hasn't traditionally been applied to, applying it with the type of discipline we have in IT to the operations side of the house, but doing it, being very careful to do it in a meaningful way to address the problems on that side of the house. Just to add to today's point, there are multiple capabilities, right? But if you look at kind of the fundamental pieces, and I think that's where we start to see tremendous synergies, you know, we have the maximum asset management capabilities to really look at all of the history of the asset, you know, how do you take it through the whole life cycle. When you combine that with our service assurance capabilities from the net core portfolio, you know, when you go all the way from event correlation all the way up to the business dashboards, based on the impact of the infrastructure availability to the business services, and security, those are kind of fundamental capabilities we're applying in the context of these industries that I just mentioned. So the value that we're starting to see is tremendous. And we're no longer talking about IT services, right? It's really going beyond the data center to say, hey, you know, how if you are in a retail environment, we can combine it to improve and deliver a superior shopping experience. Or if you are in a chemicals and petroleum environment, imagine if you're an offshore exploration or exploitation platform. It's all about improving yield of that production environment.
10:19So that's the kind of value that we're bringing in with this integrated company. You know, putting it in a corny way. How does sort of like the IT department, like, get the knowledge to figure out, you know, about yields on platforms? I mean, and to put that in the non-funny way. So, like, how do you guys, do you have sort of, like, industry-specific teams that, like, figure these things out? Or, I mean, how did you accrete that knowledge within you to sort of, like, know that these are the kind of things these verticals would want? Well, you know, IBM is a big company. It's got, in addition to the technology group, the software group, we've got a whole services organization. And, you know, we've done some strategic acquisitions there as well that have brought industry expertise on board. And we've leveraged that. So we're not just starting as some IT geeks trying to step into an industry space and say, Oh, I know how to do that. We're able to leverage people from our services division that have the experience in those industries. And actually, you know, it's been one of our company's goals to really go approach customers from an industry vertical perspective for quite a number of years. So they've built up quite a body of knowledge. You know, within our S&D division and our services division, you'll find CTOs for utilities that came directly from the industry that have, you know, their tenure of knowledge. So that's our starting point. And they identify the pain points. The solution, they identify the solutions that are required. We just come in there and say, wow, we can do this with this technology that we've managed IT with on the operations side of the house. Right. But they're our guiding hand. And the business partners. And the other great addition is what I would call kind of the new members of the IBM family. When you look at recent acquisitions like MRO Software, right? The MRO Software community with Maximo, they have lived and breathed in the enterprise space for decades.
12:23If you think about micrometers as well. They've been dominant in the telcos, but on the operations side, not on the IT side. So all that knowledge is really allowing us to bring true value. So it's not like putting a kind of a veneer industry makeup on top of cross-industry capabilities. It's really extending into industry-specific domains, right? With IBM, within Software Group, there's sort of the happy brand family there, right? And does the industry's framework sort of jump between the two brands, or is it sort of a Tivoli-centric thing? I mean, that's the beauty of it. See, there was a day when we approached this space, and so our services division would come and say, okay, what products do you have, and each brand would say, oh, try this product, try that product. It wasn't repeatable. It wasn't sustainable. So Steve Mills put in place a strategy around software-based frameworks to cut across all of the software brands. The frameworks really provide for persisting the data, the events in a common way through an enterprise service bus-oriented architecture, the standard interfaces for connecting the business partner ecosystem, as well as software group products, and best practices and methodologies. So these frameworks, again, were well-established before Tivoli got into this, and that becomes our architectural foundation. Much of it's based on system-oriented architecture as well, which gives us great advantage. A big part of our job in doing service management for the industries is not only leveraging our Tivoli portfolio in this space, but working across the software stack. And so many of the plays that we've built out, we've done the integration and convergence with the right rational tooling, with the right Lotus for collaboration.
14:23Certainly WebSphere and the portal technology, and, of course, information management is a huge player in this space. And I think that's the powerful part of the approach. So what are some examples of what these things look like when you have them? You know, you went over sort of the goals that these different industries might have, which, when you were talking about that, it made me think that this is sort of like what you do once you get BSM in place, right? I mean, once you get all of your, once you understand the services and the business-oriented stuff your IT is delivering, then you can sort of worry about optimizing the business. But it's way beyond that, obviously, because it's not just in the data center. But to that end, what are some of the examples you can tell us of what this looks like once it's set up and when someone's up and running with a framework? And all the industries that we're working in, including some of the other ones I haven't mentioned, manufacturing, the whole PLM side of the business. And then we work with the government, with health care, with military network-centric operations. So with each one of those, it's important as we build this out that we also work with customers to pilot it, to prove the value, to refine our efforts before we scale it up. That's always been a big part of the strategy. And so we already have a lot of valuable customer experience. So if I use utilities as an example, they bring in advanced metering. That gives greater visibility to energy usage. We can help manage it from an IT asset perspective now because it's IP addressable in terms of life cycle and maintenance. But on the operation side of the house, we can use it to better triangulate outages. You know, when your power goes out, I don't know about you, but the first thing I do, and if I don't do it quick enough, my wife yells at me, call the power company, make sure they know we're out too. Because you can't just assume that they know you're out because I don't want to live in this house for another hour with electricity if I can help it.
16:31And that's because the current triangulation methodologies are not that accurate. When you have addressable meters and you're monitoring them in real time, you can basically pinpoint outages. And at the same time, with the maximal knowledge of the assets, whether you're replacing a transformer or a meter or a line on the street, you know what parts to put on the truck. So what does that do? That helps the utility lower the cost of maintenance. And it's a huge issue for utilities because the infrastructure is very old. The workforce is challenged with managing it, and it's an aging workforce because people graduating from college don't want to climb down manholes or up telephone poles. They want to sit in an air-conditioned office behind a computer screen. So they need help in pinpointing, lowering the number of truck rolls, et cetera. So we were able to use the Nefco technology, which is unique in the industry for its disciplined way to monitor millions of events. And we literally have millions of meters out there as intelligent grids come online, and correlate very rapidly the events to understand what needs to be done, what automated responses need to happen, coupled with the maximal knowledge of those assets. So it's a value both to the enterprise and managing the new intelligent infrastructure from an asset point of view, but it's also very valuable. Yeah, it seems like the asset management database or the maximal stuff is a huge, well, on the boxes and arrows diagram, if you will. It's a pretty big chunk of what you end up with. Well, if I can even take it to the next level, right, looking at the future, I want to steal some of the vision of our solution strategy in the utility space.
18:37When they are looking at the smart grid as the Internet era for electricity or for energy, we are really at the tipping point of unleashing new kind of services or a new kind of looking at the industry itself. When you start to think about, okay, we're trying to move from this one-way approach to deliver electricity to maybe a network of generators that are more and more coming from renewable sources that you can eventually can start to control your own generation and consumption of energy. And you can say, hey, you know, I am a residential customer in Austin that can say, you know, I'm powering myself. I don't need you. Or I have excess of capacity. I want to put it back to the grid. That's the kind of potential that we are unleashing. And that's why when you start to think about these dynamic infrastructures, the way to manage and balance all of that infrastructure becomes more sophisticated and demands a more holistic approach on how do you manage it. So that's, I think, what we are looking forward, right? That's the kind of potential that we see. There might be new services that we don't even know about yet right now. Yeah, just an example of Bill and Gaston saying. This is how exciting it is. You know, I've lived through television from when it was two channels or three channels on a black and white set and you just watched whatever was on because that was it to now I have hundreds of channels, many of them digital. I've got multiple recorders in the house, so I watch what I want, when I want, without the commercial. I went from totally, let's say, no participation in what I watched to totally in control. Right, exactly. You were just consuming what was ever given. What it was giving to you. Right. Now think about the utility companies.
20:39It's back in the 50s where we were with television. You just use whatever they throw at you with no visibility and no control. As Gaston was saying, with intelligent metering and the type of capability we're talking about, you have complete visibility into your usage, visibility into the rate changes based on time. If you do your own power generation, which more and more people do, the ability to understand that, I guarantee you, if you have teenagers in your house and you have visibility and what they were leaving on all night long and the number of chargers always plugged in, you know, I mean, the number of devices that, and understood the cost and how you even reduce it by 10 or 15%, it not only make a difference to you personally, but, you know, if you multiply that across the country, we could do a big step towards reducing carbon footprint. Right. It's a good way for the kids to sell why they should get an iPhone, because it collapses a bunch of devices together. Less chargers. Exactly. Hey, that sounds like my kids. They get very devious. Well, great. Well, I appreciate you guys spending all this time to talk with us today. It's fun stuff. Yeah. Thank you. Enjoyed it. Thank you.