All right. I think we are gonna get ourselves started here. Well, I would say he's not quite Lachlan Murdoch, but he does have a nice British accent. I'll do my best. Um- As you said, I haven't had a TV series written about me. Yeah. I think that's something going in my favor. Oh yeah, exactly. No. Thanks for joining us, John Granger, the Senior Vice President and one of the heads of IBM Consulting. Delighted to have you join us. I'm delighted to have you here for our miniature IT services track this morning at our conference, which has been terrific. You've been at IBM for a long time, and you're now leading the consulting division. Why don't we just start there just to kind of familiarize your folks who may not have met you previously? What's a bit of your background and your role right now? Yeah. Look, I lead IBM Consulting and just a bit of, you know, context about IBM Consulting, I think. Firstly, we grew out of the acquisition of PwC Consulting by IBM way back in 2002, and I was a partner in PwC Consulting, and in fact, there's quite a few of us still on the leadership of IBM Consulting. I think that was a pretty successful acquisition actually. We're, as I would say, a full-stack consulting organization. I mean, we cover, you know, all the things that you'd expect, you know, across the, you know, various functions and industries, as well as having a full, you know, sort of global footprint. We've got about 160,000 people. I think the interesting thing, you know, Lisa, in the context of IBM is that, we're now up to about, you know, with the spin-off of Kyndryl, about a third of IBM's revenue, but two-thirds of IBM's people. When you talk about, and when Arvind talks about an IBMer, then he's, you know. Mm. As like as not, he's talking about somebody in IBM Consulting. For me personally, I'm now leading IBM Consulting. I was previously the COO. I've worked around the world. I ran the U.K. for IBM Consulting. I then ran Europe for IBM Consulting. I lived in Madrid for four or five years. Went and lived in Bangalore for two years, which was a good gig. I ran, you know, went and ran the application business, so working with our India teams out there, and then I lived in the U.S. until the pandemic. When that all kicked off, I was actually in Miami Beach and Donald Trump was closing down the world. If you remember, he was coming on telly each day saying that things were getting shut down. you know, Arvind suggested I went home at that point, so I've been in the U.K. since. Since. All right. Nice. Good. We're just gonna start right off with the AI topic because that's certainly the hot topic of the day, generative AI and AI more broadly. Can you talk a bit about how IBM Consulting is thinking about the impact of AI on your business, both from a revenue perspective as well as incorporating it into your own operations? Yeah. Look, I mean, we'll maybe come on to generative AI a bit later, I mean, in the AI space, I think it's important to say that, I mean, Arvind's strategy is for IBM, in a sentence, is to deliver transformation powered by the preeminent technologies of our time, hybrid cloud and AI, leveraging the ecosystem. We've been in this AI space for, you know, for quite a long time. I mean, clearly the market is huge. I think IDC thinks it's $35 billion now, you know, going up to $65 billion or something. It's growing enormously. I mean, clearly it's also a fundamental source of competitive advantage for our clients. I think that's really around AI and automation driving their ability simply to do more for less. Whether that's in productivity, whether that's in innovation or whether that's in scaling up, you know, I think AI and automation are an absolutely critical imperative for our clients at the moment. We've got some good capability, significant capability in this space, Lisa. We've got 21,000 of our consultants are entirely focused on data and AI and have been in this space for a while, and we really focus around four use cases. The first of those is customer care. A good example there would be in the U.S., for example, the Veterans Administration. You can imagine that they have to ingest huge amounts of documents that are coming in, you know, around claims. We've helped them with the process and with the technology, you know, which has got something like a 93% extraction accuracy, which has meant that the time now for them, you know, to process, you know, some of these claims has gone from like 20 days to a day and released huge amounts of, you know, time, and effort. That's an IBM intelligent automation solution actually running on AWS's GovCloud. That customer care is one area. A second area would be skills and labor. A good example there would be with TD Ameritrade. I mean, you can imagine they have lots of, client contact, you know, people asking about opening accounts and margin trades and what have you. We've helped them, you know, work across about 14 processes to release a significant amount of processing time. They're down, you know, by about 70%. McDonald's we're working with, all the drive-through ordering, we're automating all of that. I think skills and labor, that customer care, and then obviously you've got all of the cybersecurity. Wimbledon's coming up, you know, there's something like 200 million events that attack Wimbledon. We help, you know them, you know, sort that. Then IT management, a good example there, J.B. Hunt, who are, you know, a transportation company, really helping them to understand how do they manage their multi-cloud environment now? How do they ensure that, you know, that they're, you know, getting the best value from those? You know, I'd say that, you know, we've been in this space for a long time. It's an important part of our revenue. We're focused on these four areas, customer care, skills and labor, IT operations, and security. It's gonna continue. That base piece is gonna continue with all the froth that's going on with generative AI that we'll come onto. That base piece of automation and AI and how important that is to clients' transformation, I think that's gonna be really important for our revenues moving forward. Mm-hmm. Yeah. Mm-hmm. Mm-hmm. Okay, let's go to generative AI specifically. Yeah. Last week, down at IBM's major Think event down in Orlando, which I was there. For this, you guys launched a major new product platform called watsonx, which is an enterprise-oriented platform designed to leverage generative AI. Can you talk a little bit about what watsonx is, what it's targeted at, how it's gonna generate revenues for IBM Consulting, IBM overall? Yeah, look, I mean. It's pretty exciting. Yeah. I mean, it is exciting and you know, I think, I mean, in a nutshell, you know, watsonx is an enterprise-ready tool set that uses trusted data that is gonna accelerate the building and deploying of machine learning and foundation models. That's the sort of core of it, and it has three elements really. There's watsonx.ai, which is the studio with the, you know, with all the tools in it. There's watsonx.data, which you should think of as a sort of lakehouse that will, you know, not only access trusted, you know, data that IBM brings, but also more importantly, you know, envelop, if you will, and access a client's data. Thirdly, there's watsonx.governance, which is really focusing on how you manage with integrity, how all this works. Look, I mean, why I think this is important for us, you know, Lisa, is if I think about what differentiates IBM, not just IBM Consulting, I'd say that we're differentiating the market moment through being open, through our deep technology, and through our brand and our reputation for integrity. To some extent, watsonx encompasses those three things from my point of view. If you think first of all, we are firmly of the view that generative AI is gonna be multi-model and multi-cloud. What this watsonx tool set is going to do is really, you know, therefore allow you know, to, you know, to work on, you know, one set of tooling on all of your data sets. It will be open in that sense. We've, you know, as you know, we've talked about Hugging Face, you know, being part of the ecosystem, 'cause we think a platform is only gonna be as good as the ecosystem that it enables. Hugging Face will be part of the ecosystem, others as well. I think first then it instantiates, you know, what we believe in terms of open. Secondly, in terms of, you know, the depth of our technology, you know, what we're looking to bring forward, you know, within the tooling here is really shifting the focus from large language models to foundation models. You know, we're gonna focus those around IT events, around security, and around, you know, digital labor. We're bringing into production, on a beta basis, some foundation models that are gonna be geospatial around chemistry, and around IT events. I think you're gonna see in this IBM's technology strength as these foundation models really start to, you know, to come to the fore. Thirdly, you know, watsonx governance is gonna be about, you know, how do you explain the outcomes? You know, how do you ensure you've got the right, you know, governance protocols in place? How can you be confident that you trust the data? In some ways, this, you know, I mean, it is these three things, you know, governance, data, and the, and the studio tool set, but I think they, you know, they sort of represent, you know, what we're about. You asked how we're gonna exploit this from an IBM Consulting point of view, and I think the analogy here that's important is Red Hat. In, you know, since we acquired Red Hat, we have built from a standing start in IBM Consulting, the biggest Red Hat practice in the world that's twice as big as anybody else's. We know that 'cause Red Hat have told us. They won't tell us who the next competitor is, but they will tell us that we're that big. It's $2 billion, as you know, of our revenue- Mm-hmm which is about 10%. We managed then to build up that strategic practice driving forward that IBM technology, and we did that quickly. We did it, and the key thing I wanted to say here, you know, Lisa, we did it at the same time as we built a $1 billion AWS business and a $1 billion Azure business. This wasn't we're just all going IBM. We were also, again, working in an open way. That's what we're gonna do with watsonx. We're gonna replicate that, you know, that Red Hat model. We're gonna build a watsonx business whilst at the same time working with, you know, with other partners. We've already announced 1,000 people in our watsonx Center of Excellence. That's, you know, gonna be important. I think we've done over 100 client interactions in the last month with 40 paid engagements. I think this is gonna take off. Mm-hmm. We'll see hopefully the same. Mm-hmm ...sort of impact. Mm-hmm. What is the client feedback been? You're out with customers, clients every day, even just after the announcement last week. How are they reacting to the watsonx announcement? I think first of all they're, you know, they. I mean, they're all. Everybody's, you know, in a frenzy of pilots and proof of concepts and, you know, what does this mean, and so on and so forth. I think the feedback has been, first of all, that they're very pleased that, you know, that IBM's position is now clear. I think secondly, to the points I was making earlier, I mean, they do believe and see that IBM brings a, you know, a, as I think you hinted earlier, but brings a deep enterprise lens to this. They feel that these are a set of tools and an approach that understands enterprise, but also recognizes, you know, some of the real issues around, you know, integrity and how you manage this. Because look, I mean, everybody's been taking all these board questions about sustainability, and now all the board questions are about, "Well, what are you doing with AI? How are you gonna protect us? How are we gonna ensure that our data isn't spread all across the internet? How are we gonna ensure that, you know, that we can maintain an integrity position for our company?" I think knowing that IBM's playing in this space now is something that, you know, that gives them confidence. Mm-hmm. I know you have the, you know, I think you call it One IBM or IBM first, basically the idea that you apply all of these technologies to your own operations internally. How are you applying generative AI or will be into IBM Consulting? There's a lot of debate out there about how it will affect the demand environment, the margin environment, you know, for the services side of the business. Yeah. Well, look, I mean, I don't think any of us know how this is gonna play out yet. You know, I mean, my own personal view is that the best analogy is with what happened in the, you know, in the consulting industry with offshoring 20 years ago. I think there are some significant parallels. I mean, firstly, offshoring did offer a very significant productivity advantage. Secondly, there were huge change management issues. I mean, everybody said, "You can't do this stuff in India. It's impossible. There are all sorts of issues," and so on and so forth. In the same way, they'll say that certain things can't be done by generative AI. You know, and so, you know, I think that will come, you know, that will resolve itself. You know, the third element that I believe will play out in the same way is that at that time, everybody said offshoring will be the death of the industry, you know, it'll all shrink, and actually it proved to be a fuel that made it a lot bigger. That's my broad perspective. In terms of how we use this sort of AI in our business, particularly in the talent space, you know, I mean, we're recruiting a lot of people. We have a lot of, you know, churn and turnover, so I mean, we use a lot of these AI tools. For example, we have a very good attrition tool, which actually predicts within 95% accuracy in our team who's likely to be thinking of leaving. We can... That's just based on how long they've been in band, you know, what their pay is, what's happening to pay outside, you know, what their. I mean, we can look at their utilization patterns and so on and so forth. We can then, you know, decide, you know, whether we want to intervene or not, yeah. Then we also use a lot of watsonx Orchestrate technology actually, you know, around the promotion process. I mean, you in your organization as well, that's often very manual. A lot of data needs to be brought together, and what that's really doing is picking out that, you know, the whole process side of it. You know, who's qualified and so on and so forth. You know, you can automate all of that, and then just make sure that you're just bringing it down to who's gonna take the decision, and then, you know, move that on. We use all those sorts of tools all the time, you know, Lisa, in order to, you know, try and improve our productivity and how we operate. The overall impact of how this is gonna play out, yeah, I mean, I think, you know. Mm-hmm. We're all still learning. Switching gears off of AI, we could have the entire discussion about that, but moving over, you know, since Arvind took over as CEO, three years ago, he's really pushed hybrid cloud to the forefront of IBM strategy. You highlighted also that you've built up now several billion-dollar businesses within consulting across all of the different, you know, basically against backing up the hybrid cloud strategy. Can you talk about where we are in the cloud journey with clients, and what challenges are they facing now? How is IBM supporting them in cloud? Yeah, look, I mean, as I say, I mean, hybrid cloud is an incredibly important part of IBM strategy. I said, you know, the two preeminent technologies of our time, hybrid cloud and AI. I also think that for IBM's clients, I mean, we've always been deep enterprise and if I was to try and characterize our clients, I'd say they all run, you know, mission-critical operations. Whether I mean, as you know, we're, you know, we've got a lot of financial services clients, we've got a lot of government clients, telco clients, healthcare clients, they all need these mission-critical operations. I think what we've seen, you know, with them is that to date, you know, 75% of their applications have not yet moved to the public cloud. When you think why that is, I mean, it's really because for them, with their mission-critical operations, for reasons of data security, the complexity of some of the big, you know, application engines that they run, the cost of moving those to the cloud, you know, let alone the concerns they've got about how they skill for all sorts of different clouds. All of these things I, you know, have led them to conclude that a hybrid cloud architecture is the right answer, i.e., they have some of their applications on-prem, some in a private cloud and in multiple public clouds. If they so do, then they're able to build their applications once, deploy them anywhere. You know, they skill their people once, and then they can use them wherever they wish. Most importantly, though, and this is the open point, they can innovate anywhere with anyone's technology. In order to do that, you need a, you know, you need a hybrid cloud architecture, you need a single integrated fabric that runs across those environments. In IBM, we think we've got the best solution to that, which is the Red Hat Stack. It's that combination of RHEL, Kubernetes, you know, Linux, you know, that you see in OpenShift. So, you know, we found that to be, you know, very, very successful. I think a really good example of that, and I think you know a little bit about it, Lisa, but it's Delta. I mean, you know, where we're migrating... We're modernizing and migrating all of their applications around their various business domains, and we're taking them to an AWS Cloud, and it's perfect because it's using ROSA, it's Red Hat OpenShift on AWS, so it uses that hybrid cloud architecture. At the same time, to the point I'm making earlier, we're also helping them reskill their whole IT operations team, who are now more squad-based and who, you know, we're training as IBM Consulting in order to ensure that they can, you know, operate in this new hybrid cloud environment. I think that's a really good example of, you know, we're helping them with the as IBM Consulting with the overall architecture, but also, you know, with the people dimensions and all the change issues that goes with it. Mm-hmm. Mm-hmm. One really notable thing about IBM Consulting has been the sort of repositioning or competitive repositioning of IBM Consulting over the past several years. What actions have you taken, and this has really been heavily under Arvind's leadership, where he has really promoted the open and vendor-agnostic aspects of IBM Consulting. What actions have you taken internally, in order to drive this change and reposition the business? Look, I mean, to come back to IBM's overall strategy, as I said, deliver transformation, leveraging hybrid cloud and AI and, you know, using the ecosystem. I mean, I think the first thing, as well as that openness that Arvind's brought, I think with the spinoff of Kyndryl, he's really simplified the company, you know, Lisa. I'm accountable for delivering the transformation. Rob Thomas and the technology team are accountable for the, you know, for the technologies and products that support hybrid cloud and AI. We're a much easier company to deal with than we were, and that's a big bit of feedback from clients who used to find, and you know this. Mm-hmm. You know, used to find it quite complicated to navigate IBM. Yeah. Where they're focused on transformation, we do that through, you know, we're very clear about what our growth platforms are. The one, as I say, is our hybrid cloud services, which is this journey to cloud. The application migration, modernization, hybrid cloud management that we've just talked about. We have another growth platform, business transformation services, that you could almost call intelligent workflows, that has our process expertise, supply chain finance, what have you. It has our BPO business. It also has all of our data and AI capability. Our third growth platform is security. I think we're really clear about what we do and then what we... I mean, to answer your question about how we've repositioned it, we've developed a framework that we've been maniacally focused on that we call Transform to Grow, which is a set of just six things, honestly. When you're in a big company, you can get so distracted by different things that we've just said, you know, there are six things that we're going to be maniacally focused on that we think if we execute well, will deliver the growth for us. The first of those... Oh, and it's probably worth saying it, and that sort of fits with the mantra that I'm in favor of, which is that you should focus more and more on less and less, yeah? If you really know what you wanna, you know, execute on, as you would do with a client, yeah, bring the same level of discipline to the work that you do internally as you would do for a client. There's six things. The first is talent. You know, we've grown our business to 160,000 now. We were very focused on making sure we have more people. That's not just practitioners, but that's also go-to-market people. The other thing, it's not just the quantum of people, but their quality. We've had a huge focus on skilling. We're up to, I think, 66,000 now of skills and certifications in the cloud service providers, 55,000 in ISVs. Some of our partners, like Microsoft, you know, say we've broken records for the amount that we've done, yeah. Because I'm a great believer that, you know, certifications are a leading indicator of revenue. If you can get, you know, if you can get that skill base, then, you know, then you can make that happen. The first is talent. The second was brand. When we were Global Business Services before Kyndryl spun out, I mean, nobody knew what we did. Whether you're talking to clients and making sure clients understand that IBM Consulting is alive and kicking, or as importantly in my mind, you know, when you're trying to recruit people to come and join, if you know, if kids have got a choice between Accenture, Deloitte, and Global Business Services in IBM, I mean, that's hard. When it's IBM Consulting, then, you know, there's a level playing field. I think we've done really well on pushing on that brand. Third thing I say would be client segmentation. We're doubling down on, and going deeper and deeper, Lisa, with, you know, with our key clients. We have a client segmentation of our elite, our premier, our foundation, and we, you know, we focus on those really cutting the tail. A fourth thing would be going after the bigger transformational deals. We didn't think we were getting our fair share of those in the market, so we put together a team that's very focused on making that happen. Then the last two, the one is the acquisitions, and these are related, you know, acquisitions and strategic partnerships. Let me start with the strategic partnerships. We, as you alluded earlier, we've grown our Azure business, our AWS business to over $1 billion. We've always had a massive SAP business. We're really working hard on Salesforce, on Adobe, ServiceNow, many other partners in order to ensure that we can bring whatever solution we need to with our clients. Our acquisitions have been sort of backing that up. Mm-hmm 'cause a lot of our acquisitions, let's just take cloud, for example. I mean, we bought Nordcloud in Europe, we bought Taos, we bought Neudesic in the U.S., BoxBoat. They all brought with them a lot of competencies in cloud service providers, a lot of skilled people- Mm-hmm ...which really allowed us to sort of bootstrap that. That's really the six things. The, you know, the talent, the brand, the client segmentation, the big deals, the partnerships, the acquisitions, and just staying on those all the time. We've had eight quarters now, I think, of consecutive growth... Mm-hmm It seems to be paying off. Mm-hmm. Yeah. Now when you're in front of clients, why does IBM Consulting win? What do you find are the big differentiators? I think, well, you know better than anybody, our marketplace is really crowded, so I think it's quite difficult to say that you have unique differentiation. You sort of, you know, differentiate yourself against different segments within the market. But we think about three sources of differentiation, and the one is being part of IBM, the second is our deep understanding of clients, and our third is how our clients experience us. I just wanna unpack that for you a bit, because years ago, I wouldn't have said being part of IBM felt like a differentiation. But one of the things that I think your survey brought out, your CIO survey brought out, is that in the space of really complicated end-to-end transformation, often with a global impact, actually clients only think of two players. It's us and Accenture. You know, whether that's, you know, work, you know, I've just been talking about like with Delta or whether it's a global SAP implementation for Pepsi, it's really just the two of us. Mm-hmm. The reason we're in that segment, I think, is because we're part of IBM. The technical depth that IBM has that stands behind IBM Consulting, also the financial strength that stands behind IBM Consulting. Being part of IBM, I think is a helpful differentiation in that sort of segment. I also think that notwithstanding the work we do with partners, that, you know, our association with IBM technology works for us. I mean, our Red Hat business, you know, I think has been good, our mainframe modernization. Also I think how IBM, you know, positions itself in the marketplace, like, you know, I think the thought leadership on hybrid cloud and the thought leadership you're gonna continue to see around generative AI and how you use that sensibly, I think that helps us. Mm-hmm. That's the being part of IBM. The second bit, really understanding our clients. I mean, we have deep industry expertise. Against the Indian service providers, I think that's a clear differentiation, and our clients would say we understand more about their processes and their industry challenges than some of the other competition. We've also had a very extensive, you know, application management estate for a long time, which means that in certain clients as well, we've been running their businesses, you know, from an application point of view for so long that we really understand it. That's the second bit of differentiation. The third bit, though, the really unique bit, I think is how clients experience us through Garage. Garage is an approach that we use to co-create, to co-execute, and cooperate with our clients. We've done, you know, I think, you know, nearly 7,000 of these in 2022. It's really about how you build a minimum viable product very quickly with a client. You iterate, you know, very fast and then build that out. What Forrester has found is that in an independent survey that they did of this, is that, you know, when you use Garage, you get 10 times more innovative ideas, your time to market is like 70% quicker, and six times more projects actually get into production than is the other way, you know, the than in other ways. So I have loads of clients who tell me the one thing that is truly, you know, nobody else has got is this Garage, and how those clients experience us as IBM Consulting. That's something that we're, you know, really building out on. Those would be the three things, being part of IBM, our, you know, our deep understanding of our clients, and then thirdly, how our clients experience us through Garage, and we keep pushing on all of those. Let's talk a little bit about the current demand environment. You guys just posted, I think, 8% constant currency growth in the most recent quarter. You're still seeing very strong revenue growth within IBM Consulting. Just talk a little bit about what you're seeing out there. Are you seeing any signs of softness in the macro? Not really. I mean, I should talk about the United States, but I mean, in the macro, I mean, I would say, you know, we would still see that technology-enabled transformation is top of clients' minds. I think this is the big difference. In previous, you know, times of economic uncertainty, we saw a lot of this, you know, get shut down. You know, we're not seeing that. I mean, we're seeing that there are, you know, those big technology-driven, you know, transformations are seen by clients as being essential. I think the root causes of those, I mean, a couple of them are still pandemic-related. I think that whole transition to, you know, to, you know, to virtual relationships with your customers and clients that, you know, that organizations have had to navigate, that still is driving a lot of demand for digital transformation. Supply chains aren't fixed. We all know that. That's driving a lot of demand. Security, you know, as we talked earlier, still a huge issue. Then I think the, you know, the sort of coming back to the automation and AI, I think clients have found it very difficult in the last year because of the wage inflation and because the attrition and the churn to see how they're gonna hang on to certain skills. Consequently, they've concluded that actually, in many cases, the best way of dealing with this is to find a way to automate those business processes so that you have less need for that sort of skill. Consequently, I think that's, you know, that's driven a lot. Overall then, I mean, we see the market at being, you know, for our sort of business as being about $800 billion growing, you know, over the next, you know, decade, you know, mid-single digits. You know, particularly, I think we see about half of that in the cloud and intelligent workflow space. I think we're confident. I talked about our growth platforms earlier, which are, you know, bang on those two, you know, market pools. I mean, we're pretty confident, you know, you know, we're in the right place to pick this up. There is an issue in the U.S. I was gonna say, yeah. What's the dynamics you're seeing right now in the, in the U.S. versus internationally? Mm-hmm. I think it's really sort of paradoxical, actually. I mean, I think you've got all this, you know, all this big transformation work going on. Clients are investing, you know, really heavily in that. I think in the U.S., I mean, and I'm not quite sure why it is, but particularly in the U.S. there, you know, I mean, there is a pressure on fundamentals. I mean, we all feel that pressure on fundamentals. Whilst there is, you know, there's lots of, you know, support and drive around these big, you know, these big transformations, I think elsewhere, clients have much less contingency. They're very tight on their business cases. I think in some, you know, for some less important projects, they're pushing them out. I think, in the space of staff augmentation, and, you know, Lisa, all those enhancements that sort of float, you know, around the edge of, you know, some of the bigger pieces of work that you're doing, I don't think there's as much opportunity, you know, to pick that up. Yeah, I think it's become more difficult. I think the critical thing from, you know, for us, however, is that we've seen no backlog erosion, so nothing's getting canceled. It's more that, you know, things are going to the right or, you know, clients are, you know, just, you know, pausing for a moment or two. I mean, it's more difficult in the United States than elsewhere, and I think we've been public about that, as others have. On the other hand, I mean, we had very strong signings in Q4. In Q1, we had our strongest Q1 signings, ever, I think. Normally we have, you all know this, but we have a sort of seasonal dip of Q4 for Q1. Mm-hmm. You know, so that's indicating to us that the demand is still. Mm-hmm. Is still out there. You know, you know, we're as confident as we can be, really. Good. Let's turn to productivity and margins. This has been a big focus in IBM Consulting more recently as initiatives to bring up the margins. Can you talk a bit about what you're doing to drive margin expansion within IBM Consulting? Well, we expanded our margins 50 basis points in Q1. We've been having a lot of investment that we've been making in the business for some time, so we're balancing, you know, what we're doing on productivity with those investments. In the same way as we have this framework for growth, Transform to Grow, I think we're also, you know, pretty focused on five levers that we push hard on in order to try and, you know, continue to make progress on our margins and productivity. As you know, we've guided to, you know, that we're gonna improve by one point. The first of those is pricing. I think we have been relatively successful in pricing. I mean, we've moved beyond just enforcing, you know, COLA, those cost-of-living agreements, to really starting to leverage, you know, NPS scores. I was talking about Garage earlier. We get an NPS score for Garage, which is about 79 is the average. Yeah. 80 is world-class. One of the things that we've really started doing with clients is, regardless of cost-of-living agreements and what have you, is just having an honest conversation about if we've got really high feedback, whether it be NPS score or anything else on the value of what we're providing, yeah, and yet we have an issue in terms of the wage inflation, and consequently, we need to do something with our pricing, and therefore, in a spirit of partnership, we need to, you know, come to some sort of arrangement. We found that those have been very productive conversations for us and really pushing that point with them of saying, "Look, you know, if it's clearly value for you, then, you know, we need to be fairly rewarded for how we're providing that value." I think we've got a lot more disciplined about that, you know, pricing and having that continuing conversation. Mm-hmm. About that in the context of inflation. Labor pyramids would be a second thing. You know, I mean the ideal within any consulting organization is to have a nice pyramid where, you know, you have the appropriate number of people, you know, at the higher levels, you know, leading the business, driving sales and what have you. You know, more junior people, you know, really as being the engine of your revenue and your profit. We're continuing to, you know, to be maniacally focused on that and getting that right. A third piece is around location. I mean, we're blessed with a really good, you know, operating model. We have our offshore centers in India and Latin America and so on, but we also have a network of nearshore centers. In Europe, for example, in the Netherlands and in Germany, but also in the U.S., in Halifax, for example, and in Baton Rouge. Then we have our domestic teams who are in market. making sure that the right work is getting done at the right place in that supply chain at the right price is also something that we work really hard on pushing forward. Utilization, you know, is obviously the lifeblood of what we do. Very focused on that and ensuring that's in the right place. One of the things that I think has become more important that we're on at the moment, Lisa, in the current market environment that we've just been talking about, is something that we call delivery to price case. That is, you know, in our business, I mean, a client needs something doing, you release a solution, you see how you're gonna staff it and so on. In the same way that I said clients have got much less contingency, we need to be super careful about our contingency, and we need to make sure that we actually deliver the work that we proposed at the margin that we said we were going to. Which means that our teams have got to be really tight on ensuring that, you know, that they are using the right level of people, and that they're managing, you know, all of those, scope issues, you know, really tightly. We've got a big focus on that. None of that is rocket science. I mean, this is just. You know, you just have to grind it out. You know, it's just heavy lifting. You know, so that's, you know, that's just what we do. We're, again, we try and keep it down to a relatively small set and try and drive ourselves towards excellence in those. In so doing, that'll help us, you know, ensure that we Mm-hmm. deliver at least a point of margin improvement. Good. All right. Let's talk a little bit about M&A. You commented earlier on a number of the companies that you have acquired into IBM Consulting. Can you just talk about your M&A strategy now and what your appetite is for larger deals versus smaller deals? Any particular areas of focus? There are three questions that we really ask ourselves around our acquisition strategy. I mean, the one, or our acquisitions. I mean, the one is it aligned to strategy? The second is it going to create some measure of synergy for the, you know, across IBM? The third is it going to be accretive from a cash flow point of view in a, in a reasonable period? That's the sort of test that we, you know, that we set ourselves. In particular, you know, in terms of the strategy, I think we've been focused on how we build capabilities that support in some ways, like I was saying earlier, that, you know, that support those growth platforms of hybrid cloud and intelligent workflows, but also our partnerships. You'll see, you know, we... As we said, I mean, in the cloud space, we acquired Nordcloud, Taos, BoxBoat, Neudesic, which was the last big, you know, Microsoft shop in North America. We also acquired, because we said we want to build out with Salesforce, we acquired 7Summits and Waeg in North America and Europe, respectively. You know, we've bought a data property in Europe called Bluetab. And then we started to expand our product engineering capability with Dialexa. A lot of these acquisitions, the point I'm trying to make is that they're sort of like bootstrapping, you know, the strategic areas that, you know, that we want to get into. We are making some specific acquisitions in markets where we wanna be strengthened. A recent one and a big one for us was, you know, to your point about appetite for bigger ones, was Octo. We have about 4,000, 4,500 people in our federal business. Octo is about, you know, 1,500 people. I mean, it's a big addition. They're, you know, I think working in the federal space, I mean, they're in cloud, AI experience, so same sort of areas as us. But they're also in this sort of co-creation culture. They have something called O Labs, which I've been to in Virginia. You should see. I mean, it's a really nice, you know, facility where they co-create with their clients. I think that works really well for them. That's a good example of where we're, you know, getting into in, you know, an industry play rather than a capability play, into a market where we wanna strengthen, which is federal, but also of, you know, of a reasonable size. The other thing we think about, I did just, you know, want to mention is how the integration is happening is actually quite important here, because the integration of services companies is different from the integration of software companies. Within IBM, we're actually quite, you know, obviously as consulting, we're very focused on 'cause you're all you're buying is talent. You really need to make sure that you know, that you're bringing them into IBM Consulting in a way that, you know, is gonna maximize the retention that you have. Whereas, you know, sometimes on the software side, it's more asset-based, you can you know, take a slightly different point of view. Mm-hmm. That's what we think about. Yeah. Another thing you highlighted earlier in the discussion was the big strategic partnerships and technology partnerships that you have at IBM Consulting. You have a huge one with SAP, had a recent announcement there. You also have big ones, of course, with the big cloud providers. What's your approach and strategy around these strategic partnerships? The business logic here is... I mean, Arvind's been clear. No one company can have, and this is just common sense, can have, you know, a monopoly of the technology solutions that, you know, that a client needs. It's also good to, you know, to, you know, mitigate and to diversify your risk by, you know, working with more partners. So we're clear that we need to do this. I guess there's four things we've done. Two of them we talked about already, so I mean, I'm not gonna reiterate on skills, but, you know, massive buildup of skills with these partners and skills, you know, being this leading indicator of revenue, but also the acquisitions. I think the other things that we've done is, firstly, we've deliberately built an alliance organization, Lisa. We've actually got people who almost in a white glove way treat these partners like clients. That's the mindset that we try to get into is that, you know, we need to build very close relationships with them. We need to become friends with them. We need to have people who are full-time dedicated to managing the relationships with them. In that as well is a really important concept of trust, 'cause none of these partnerships work unless you know, unless you have deep trust with each other. I mean, where it goes wrong is if I agree, you know, with you as a partner, we're gonna go for this pursuit, and then halfway through I flip to somebody else, then that, you know, that can set you back decades. Very disciplined in how we're building the trust across the organization. I've talked about acquisition skills, you know, this alliance organization, also building joint solutions. We've been doing this for ages with SAP. We do something called Rapid Impact Solutions, you know, where, for example, you know, we've got customer care solutions for utilities. These are just you know, industry solutions within SAP that no other provider has, and therefore, people in SAP know, oh, you go to IBM Consulting if that's, you know, the issue that you wanna take forward. That's, I think, what we're starting to do now with all of these partners, 'cause if you can get these more specific industry solutions built that are almost unique to our partnership, then that's how you drive the footfall and traffic, if you like, within, you know, within your partner, you know, towards you. We've been very deliberate about this and, you know, sort of now moving up that maturity curve to ensure that we've got a really good set of joint solutions with each of these partners. Down to our final two questions, I guess. The first is around the synergy with IBM technology. As you highlighted, post the spin of Kyndryl, one of the really effective things Arvind has done is like simplify how IBM goes to market to customers. How should investors think about the relationship between IBM Consulting and the technology side now in this sort of new modern context? How frequently are you pulling through IBM technology, and how does that interplay work? I mean, clearly Red Hat, as I said earlier, is the poster child here, yeah? With the, you know, with the amount that we've driven for them. Elsewhere, we have about 15 of our practices in IBM Consulting that are focused on IBM technology, so mainframe modernization, Maximo, sustainability, you know, with the Envizi platform and what have you, and obviously security. Did some really good stuff, for example, at the Soccer World Cup recently, you know, where we had 30 experts on the ground that were really providing a lot of the cybersecurity for the Qatar, you know, national cybersecurity agency. So we have a lot of capability around that. We are, for IBM technology, we're the number one channel in terms of their system integrators, yeah? I think the really important point, as you say, how should investors think about it, is we are absolutely not tethered to, and nor are we a channel for IBM, or solely a channel for IBM technology. We have a really strong culture that, you know, that Arvind's 101% behind, which is that we're client first, but with a point of view. What we do is, you know, the most important thing for us is to become a trusted advisor to a client and to give advice that the client is gonna believe in. We're client first in the sense that we look at the client's issues, the client's challenges, and then decide what is the best answer. Many times a client has already decided, and it's not IBM technology, in which case, you know, we, you know, we'll often see that that is also the right answer and we'll just work, you know, as I said, with partners to ensure that we've got that right technology. The client first with a point of view is, however, if the client is still not made their mind up, if the client is still uncertain, then we may recommend IBM technology, always on the assumption that our point of view is that the IBM technology is in fact the right answer. You know, I think we've been pretty effective at maintaining this. Funnily enough, I think, you know, from how this ties together well, Lisa, is I think the clients who know us in IBM Consulting well know that to be true. The people we have the most difficulty with are actually clients who don't know us so well, i.e. new logos as it were, who think that we're more, you know, that we're more closely tethered, you know, to IBM than in fact we are. In that sense, you know, the growth strategy that I talked about earlier in terms of, you know, doubling down on less clients actually helps to, you know, to position us appropriately, 'cause those are clients that understand how this works. Yeah. Good. All right. Just to close, what are your personal top three or four priorities to ensure that IBM Consulting maintains the level of growth and success that you've had over the last couple of years? Look, I mean, I just, I've explained, I think, you know, we've got quite a structured way of thinking about our growth and about our margins, the thing we need to do is just keep executing. You know, I mean, it's, you know, You don't wanna get diverted. That's how we're gonna be successful. We'll stay focused on our six, you know, growth priorities. We'll stay focused on our five margin priorities. I do think, however, to where we went earlier, you know, a personal priority will be making sure that we can make watsonx a success for IBM Consulting as well as for IBM, in the same way that we made, you know, Red Hat a success for IBM but also for IBM Consulting, 'cause I think clearly, you know, the whole market opportunity around generative AI is something that we've got to jump into. Yeah. Excellent. Thank you. Thank you. All right. Thanks, John. Thanks a lot. Thanks, everyone. Thank you.