Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. We're going to go
Speaker 1: to what's happening with IBM. I'm pleased to welcome the
Speaker 1: CEO of Vin Krishno, who's coming from the Companies Think Conference,
Speaker 1: an annual event, and Avin, I'm just excited to hear
Speaker 1: really from you the pace of change that's happening with
Speaker 1: Agenda AAI. I think you put out there that in
Speaker 1: three years time there's going to be one billion apps.
Speaker 1: It is so noisy, it is cluttered. How are you
Speaker 1: may managing to streamline it for your customers?
Speaker 2: Look first, I think that number is the really interesting number.
Speaker 2: A billion new applications using AI for a third of
Speaker 2: them using agentic AI. And the way that we are
Speaker 2: approaching it is, how do we make it easy for
Speaker 2: our customers leverage their own data, insert their own data
Speaker 2: into the models, and then leverage it to make the
Speaker 2: enterprise a lot more productive. That's what we're after building,
Speaker 2: and that's what we're just announced with our watsonex hocice
Speaker 2: straight with agentic capabilities, including one hundred and fifty new agents,
Speaker 2: some from us and some from our partners.
Speaker 1: One hundred and fifty agents sounds an extraordinary number of it.
Speaker 1: And look, you've got a big book of business already
Speaker 1: when it comes to generative AI six billion dollars in growing.
Speaker 1: But how much are you seeing the CEOs you serve
Speaker 1: pushing back on overwhelm. How are you managing to help
Speaker 1: them navigate what feels like in some ways a less
Speaker 1: than productive environment for the amount that they're investing in
Speaker 1: generative AI.
Speaker 2: Look, I think that what CEOs are concerned about is
Speaker 2: that now that you have gone, the era of extraventation,
Speaker 2: as I call it, is over. Now people are looking
Speaker 2: for business value on AI. As they're doing that, they've
Speaker 2: discovered that about twenty five percent of the time these
Speaker 2: projects are paying off very well for them. So learn
Speaker 2: from that twenty five and then figure out what are
Speaker 2: they enhabitor as in the other seventy five and take
Speaker 2: those out, and those are in variably there's fragmentation in
Speaker 2: the environment. So how do you have a more integrated environment.
Speaker 2: You've got to make sure that there is value in
Speaker 2: the AI projects. Don't just do an experiment and leave
Speaker 2: it on the shelf. You've got to scale it and
Speaker 2: deploy it across the enterprise. So how do you integrate?
Speaker 2: How do you create the right hybrid environment. That's what
Speaker 2: we're helping them with, and then we believe that twenty
Speaker 2: five we'll go all the way up to fifty or
Speaker 2: seventy five, at which point that's a great return for
Speaker 2: the CEOs.
Speaker 1: That software that you're unveiling, those consulting offerings that you
Speaker 1: continue to provide of in at the moment. How much
Speaker 1: is that bearing fruit in this current environment? How willing
Speaker 1: are these CEOs to experiment and move on from experimentation
Speaker 1: when we've got a really uncertain economy on our hands.
Speaker 2: Look, I'm a more of an optimist on the uses
Speaker 2: of technology in the current environment than a pessimist. And
Speaker 2: why do I say that. So when you have supply
Speaker 2: chain issues, you have cost issues, you have productive issues,
Speaker 2: technology becomes an answer to help you scale the business
Speaker 2: without having to add a lot of physical cost into
Speaker 2: the business. So I find the appetite of the CEOs
Speaker 2: is quite high to spend on technology as long as
Speaker 2: they can see a return that is our college short
Speaker 2: to medium term meaning six months, twelve months, eighteen months.
Speaker 2: I find people leaning in very heavily, and I think
Speaker 2: that's why you see enterprise tech spending has remained robust
Speaker 2: despite all of these issues that could be talked about.
Speaker 1: What about government in the moment Scott beson getting grilled
Speaker 1: on a hill at the moment around DOGE and that
Speaker 1: has had implications for your own business. I think it's
Speaker 1: about fifteen contracts we understand having canceled. Are more to come.
Speaker 1: Are you seeing an end to that cancelation process.
Speaker 2: I actually choose not to get worried about dos. I
Speaker 2: think that the areas where we have very robust contracts,
Speaker 2: when we're helping the VA process claims, we help the GSA,
Speaker 2: say on expense management, we help the DD on payroll,
Speaker 2: those remained very robust, and I don't believe that those
Speaker 2: will come under any significant attack. Areas which do come
Speaker 2: under attack are much more what I call discretionary, or
Speaker 2: are much more time and material or labor augmentation based.
Speaker 2: Those may come under attack. It actually does not worry
Speaker 2: in me. I believe that even if those come under attack,
Speaker 2: there is more than enough offset from the areas that
Speaker 2: are more critical interesting.
Speaker 1: So basically any cancelations will be outweighed by business that
Speaker 1: you potentially can win within the government as well.
Speaker 2: I believe that from having talked to very senior members
Speaker 2: of the administration, there is a huge appetite to use
Speaker 2: technology to modernize government and to help make government itself
Speaker 2: more efficient. You can't achieve efficiency just based on cost cutting.
Speaker 2: You actually also will have to invest in technology. And
Speaker 2: I believe, and not just my belief from how spoken
Speaker 2: to them, they have an appetite to do that.
Speaker 1: I'll tell you where there's appetite. Air traffic control and
Speaker 1: Trump himself talking about maybe raythean IBM coming in to
Speaker 1: help solve some of the real anxieties we've got just
Speaker 1: a loss of radar over happening in Newark? Is that progressing? Ovin?
Speaker 1: Are you able to share on how any sort of
Speaker 1: contract might shape up?
Speaker 2: Look, I don't want to talk about any specific contract
Speaker 2: or any specific agency, but I think what he just
Speaker 2: pointed out is a great example where technology will be
Speaker 2: part of the answer. Better integration, better computing capabilities, better
Speaker 2: communication capabilities, all of those will play a role because
Speaker 2: right now we are living on not exactly but essentially,
Speaker 2: I'll let's call it a slightly evolved system that was
Speaker 2: built in the nineteen seventies.
Speaker 1: Ovin, what's crucial about air traffic control is accuracy, and
Speaker 1: I know that's almost where everyone's eyes are when it
Speaker 1: comes to a GENTERKI when it comes to generative AI,
Speaker 1: is the risk of the underlying data being inaccurate and
Speaker 1: how that compounds? How are you managing to tackle that
Speaker 1: sort of area of anxiety and reality.
Speaker 2: I always break the problem down. The core of air
Speaker 2: traffic control has to be built on very precise data,
Speaker 2: completely accurate data. You're not going to go use agentic
Speaker 2: AI to estimate where a plane is. That's going to
Speaker 2: be based on much more physics and hard engineering. Now,
Speaker 2: could agentic AI come in trying to optimize routes in
Speaker 2: worrying about how do you increase the total flow and
Speaker 2: capacity at an airport? Perhaps? But I'm using the word
Speaker 2: perhaps because there's a lot of careful work to be
Speaker 2: done there. But could agentic AI be used to process
Speaker 2: claims faster at Social Security or the VA? Absolutely, and
Speaker 2: then you make citizens happier, you deliver them services faster
Speaker 2: at a lower cost. That's where I would go first
Speaker 2: with agent KI.
Speaker 1: In the private sector, they're looking for accuracy and that's
Speaker 1: something you're offering at the moment. How much is you
Speaker 1: just seeing the adoption and the use and productive use
Speaker 1: of agenda KI being limited by that underlying data right now,
Speaker 1: or is that something that we're streamlining already.
Speaker 2: I albit advise our clients start with the use cases
Speaker 2: where you can live with some risk, where you do
Speaker 2: not need it to be one hundred percent accurate. So
Speaker 2: if you think about customer service, you think about end
Speaker 2: client experience. I think about our internal IT help lists.
Speaker 2: Those are all areas where where you were dealing with
Speaker 2: people you actually had a ten or fifteen percent errorrate.
Speaker 2: So now that you deal with the AAI, you can
Speaker 2: actually have a lower error than that, but maybe not perfect,
Speaker 2: but you can still live with it.
Speaker 1: Think is all about innovation. I'm looking at the car
Speaker 1: behind you. I'm thinking about the way in which you're
Speaker 1: also pushing the agenda, not only when it comes to hybrid,
Speaker 1: when it comes to on when you thinking about the
Speaker 1: innovations you're making on mainframes, but quantum A You're getting
Speaker 1: a lot of questions on quantum right now. Scott Beson
Speaker 1: wants the US to lead in AI but also in
Speaker 1: quantum computing. How is that making a difference in your
Speaker 1: business right now?
Speaker 2: So we are very very pleased with the innovation we
Speaker 2: brought out here. We talked about the AGENTAAI. We just
Speaker 2: mentioned the mainframe. We can do four hundred and fifty
Speaker 2: billion AI inferences per day on the latest mainframe we
Speaker 2: just announced this quarter, the Z seventeen. Think about using
Speaker 2: that in financial systems to help reduce fraud. So that's
Speaker 2: an incredible area of innovation on quantum. Part of the
Speaker 2: reason we announced the huge investment last year and into quantum,
Speaker 2: and we just brought out the quantum system to this
Speaker 2: year is because we are very excited where that will go.
Speaker 2: That's an area in which we believe the US must
Speaker 2: and can lead on quantum computing, both for national security,
Speaker 2: but also for competitive advantage and for growing a business.
Speaker 1: And is that a competitive advantage continue to grow here
Speaker 1: in the United States. You've just unveiled a huge amount
Speaker 1: of investment into the US.
Speaker 2: Yes, So we put one hundred and fifty billion dollars
Speaker 2: here into the US because we believe that if I
Speaker 2: look at AI, I look at hybrid cloud, and I
Speaker 2: look at quantum coming, the growth opportunities are here. So
Speaker 2: we want to invest to take advantage of these opportunities.
Speaker 1: IBM Chairman President CEO Arvin Christian and live from think
Speaker 1: We very much appreciate your time today