Michael Speranza, CEO at ZephyrTel talks with John Furrier & Dave Vellante at CLOUD CITY Live 2021.

While Telcos are already selling innovative cloud solutions to their customers, they have been slow to adopt their own critical business systems. But why? Have you and your organization considered the net benefits of moving to the Public Cloud? The reasons are massively compelling: increased cost effectiveness, optimized staffing budgets, economies of scale, improved business agility, freeing your teams to focus on higher value work, becoming data-driven and the ability to generate new customer revenue. A 50% decrease in costs plus a 30% increase in revenue could equate to 80% net improvements to the bottom line.

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CLOUD CITY Live 2021

Michael Speranza, CEO at ZephyrTel talks with John Furrier & Dave Vellante at CLOUD CITY Live 2021 and breaks down how ZephyrTel transitioned away from legacy, on-premises oriented business.

  • 00:04 - 00:20 John Furrier

Okay, thanks Adam and studio. I am John Furrier... Dave Vellante.. we are back on the Cube set here in the middle of all the action of Mobile World Congress. It's CLOUD CITY - TelcoDR’s digital revolution. Michael Speranza, CEO at ZephyrTel’s here with us. Great to see you, thanks for coming on theCube.

  • 00:20 - 00:21 Michael Speranza

Thanks for having me, Dave, and John. Appreciate it.

  • 00:21 - 00:42 John Furrier

Alright, so we're in the middle of the action…

We were just talking while we were waiting to come on camera.

East coast… I'm from California, Dave's in Boston, you're from the New York area. We're back to real life! This is what's happening here - it's a hybrid event, not fully packed but good showing, a lot of action. So, let's get to it. What do you guys do? Take a minute to explain what you do real quick and I got some specific Public Cloud questions for you.

  • 00:42 - 01:15 Michael Speranza

Excellent. ZephyrTel is a global provider of telecommunications solutions to everyone across the stack: tier one, tier two, and tier three; CSPs throughout the world. We've got 300 customers. And I think probably the most interesting part about us as a company is that we actually started our lineage in the traditional sense in terms of these on-premise legacy large systems. And we are a provider that has jumped in feet first to the Cloud revolution. And we're taking the effort now and the investment to move all of our solutions to the Public Cloud. And we're super excited to be here and showcase that to everybody.

  • 01:15 - 01:40 John Furrier

I got to ask you because one of the things that we've been documenting, Dave and I, for the past 10 years is the enterprise transformation. I mean the digital transformation has been going on for quite some time on the enterprise side. Telco now seems like it's getting tuned up nicely to be disrupted and transformed. You're in the middle of it. You've been on both sides of the table. Now you're on the full-throttle transformation. So what's your take? Where are we at?

  • 01:40 - 02:07 Michael Speranza

Yeah, it feels as though we're at an inflection point. I think the last, call it, 12 or 18 months, maybe that's been an industry pause where we kind of look back and reflect around what their long-term strategies are. And more and more just over the last 12 or 18 months, we've seen more announcements, more big names, jump in feet first, be a little bit more public. No pun intended about what their intentions are, what their investments that they're making into the efforts that they're trying to deploy in their networks. And we feel like we're at an inflection point and we're ready for it.

  • 02:08 - 02:16 Dave Vellante

It's interesting that ZephyrTel had a legacy business, an on-prem business and you're transitioning. What was the catalyst for that transition and what has it taken to get there? What does that journey look like?

  • 02:17 - 03:07 Michael Speranza

I think the catalyst is really figuring out how to enable our customers to compete on a ladder that has more rungs to it. If you look at these legacy on-prem solutions, we could pour mountains and mountains of dollars into R&D. And at the end of the day, we would still be struggling to offer them something that really creates a true competitive advantage for their business. And really when you make the move to the Public Cloud and you start leveraging some of the platforms that are out there, it changes your profile dynamically in terms of what you can offer to the customer. So for us, that realization is what happened. And we jumped in feet first and just the ability to get products to market, to give them a different cost structure is something that we would have never been able to do with our traditional legacy.

  • 03:01 - 03:11 Dave Vellante

How did you do it? Because you had a balancing act, there, you’ve got your existing business. Did you sort of fence that off? And start with the Cloud-native approach? And what did you find was the sort of before and after, and some of the benefits that you saw.

  • 03:12 - 03:30 Michael Speranza

Yeah, that's a great question. So, it's a difficult conversation with the customer. I think you have to go and engage with the customer and our approach has been to be very open and transparent with them. We're not telling them that what they're using doesn't have a future. We're just telling them that we believe the future is brighter somewhere else. And that's what we're choosing to invest in.

  • 03:31 - 04:01 John Furrier

And they won't... they shouldn't even know it. I mean, because the Public Cloud is bringing in new things, one of the things we've been riffing on in the past year is the three Rs: Reset, Reboot... - phase one - you've got to reboot things. Then you re-platform with the Cloud and then all the winners, once they re-platform to the Cloud, they refactored their operations. And so this seems to be like the secret recipe - once you get to the refactoring, then you're introducing net new opportunities. So you do some cost recovery, you re-platform, you get some things going, and then boom, new things are happening.

  • 04:02 - 04:11 Michael Speranza

Yes, absolutely. And you have to have a long-term horizon. If you're trying to make these types of transitions over quarters or even years, it's not something that's easy to do with a business.

  • 04:12 - 04:14 Dave Vellante

Did you move the whole house into the Cloud?

  • 04:15 - 04:16 Michael Speranza

We're working on it.

  • 04:17 - 04:35 Dave Vellante

Okay. But, when you think about the Telco industry, this is, to me anyway, there are clear workloads that can and should go into the Cloud like immediately. I think about mainframe downsizing in the day. I mean, anything that could go did go - fast. And so is it a similar parallel here?

  • 04:36 - 05:11 Michael Speranza

Yes, we've actually got 10 products in the portfolio. We probably have half of them in the Public Cloud already. It doesn't mean every customer is using them in that dimension, but we have half of them already in the Public Cloud.

Dave: As an option.

Yeah, absolutely, as an option. And then the others, I think, understanding this paradigm of kind of, when we get into more detail, like out of this, no-feature-left-behind mindset that you have to challenge where you really have to convince the customer that no industry disruption ever started by making the new innovative product do everything the old one did. And they have to kind of take that journey with you and lean into the change and understand what the long-term benefit is.

  • 05:12 - 05:27 Dave Vellante

And talk about the business. I mean, you remember John, when we got started, John was driving to the data center and racking, cabling, and then when we entered the Public Cloud I was like, wow, we saw the light. So until you do it, sometimes you can't experience it. What are they seeing in terms of the benefits?

  • 05:28 - 06:04 Michael Speranza

Yes, I mean the two major benefits are obviously cost and agility. And you talk about agility and just what it enables them to do from a subscriber experience perspective, deploying new services, adapting those services to the new business paradigms, and really improving the customer experience. There's no mistake. You look at this industry, it's probably got one of the most depressing statistics around customer experience and NPS of any industry in the world.

  • John: Cables up there too.

Yeah, it's hard not to improve that. And the other is cost. And that's an undeniable discussion that you can have if you get to the right level of the customer about what the long-term benefits of the Cloud are.

  • 06:05 - 06:11 Dave Vellante

It's funny as you usually hear NPS in the context of how great the NPS is, but you hear it a lot in this industry in a different context.

  • 06:12 - 07:02 John Furrier

One of the things we've been talking about, and it's the big theme we're going to get to tomorrow (in CLOUD CITY) - the open side of this. Open random and rather than O-Ran alliances got more and more members were reporting on that. As you look at the stack, the tech stack, you got a lot of OT and IT is coming in because it's digital a lot more IP-based systems. So you have this OT legacy culture of just, okay, we have, sometimes regulation drives it, but sometimes it's just old ways of doing things. Is that going to be encapsulated with like say containers or does it have to die? Does it have to be let go, or could you nurture it, like sometimes we still have mainframes? I mean, big banks have mainframes. They don't go away. They do one thing. So is there a coexistence between that old legacy on top and abstracting away that nonsense?

  • 07:03 - 07:41 Michael Speranza

I think certainly there can be. And we've employed that approach with customers where if they're looking at deploying new services or tackling a new emergent market or rolling out a new kind of tiered service offering that might be under a different brand or label from their core brand. We've certainly approached it that way. The big thing for us is really approaching that discussion with the customer and really talking about what we can do, not what we can't do, and can't emphasize that enough. And the other piece is really having the right decision-makers in the conversation. And understanding that you're talking to someone who understands the impact on the P&L not just on the making kind of virtuous technical decisions about the way things were done in the past.

  • 07:42 - 08:15 John Furrier

Michael, I got to get your thoughts on the agile because obviously Cloud, speed, agility. We just heard from Michael Soft on the interview I did with him around high-density chips and low power, that's going to enable more stuff. So there's more stuff coming in the hyperscale, there’s more Cloud and you start to see companies like Snowflake built on top of AWS - hugely successful. So this is an enablement market. Agility's key, how as the CEO, you're looking at this, okay, you're refactoring, you're re-platforming. Agility is a benefit. How does that change how you run the business, how you serve customers?

  • 08:16 - 08:59 Michael Speranza

Yeah. So it really changes where our investment dollars go. That's probably the number one impact. So if you look at AWS as a platform it started 15 years ago, it had one service. Today it's got over 200. So understanding that these platforms receive billions and billions of dollars of investment every single year, regardless of which one you're aligned to, and leveraging that to power the services that we provide. We don't have to build everything. We can leverage the capabilities they provide to us, really focus our energy and our dollars into things that make our application unique to our customers. So that was really one major transition as leading an organization that you have to make. And then you have to convince the organization to go in that direction. It's different and you have to be very overt and transparent with the customer.

  • 09:00 - 09:26 Dave Vellante

Well, in the early days of financial service - Cloud was an evil word. And now every financial service organization is leaning in big time. There's obviously reticence among Telcos to move to the Public Cloud. There's a lot of discussion about, oh, openness, it's hard to replicate the reliability of the network, et cetera, et cetera. Maybe some of that’s rational and founded but what do you see in terms of the reticence and the risks and how are you helping mitigate those?

  • 09:27 - 10:33 Michael Speranza

Yes, so my perspective - it’s really just been this kind of cascade of excuses and explanations as to why not to go. And it started with things that could have been legitimate issues at the time of data sovereignty or security - they've been solved. You move on and now it's that notion of no feature, no man left behind, we have to have feature parity. We can't go. Every other industry has debunked that myth and now the one that I think is most important to challenge is organizational dysfunction, where it's really about accessing the right levels in the customer to have that conversation, to neutralize the power or importance of anyone dimension of decision-making and have an overt business discussion about what are the numbers behind the solution and how you're providing it. You have to include the cost discussion in it, and you have to actually get the finance person to really understand the technology and not just outsource that decision to somebody else. Because that person is often faced with making a decision that could be deleterious to their role, their business, their own organizations. And that's something that needs to be arbitrated at a senior level.

  • 10:34 - 10:41 Dave Vellante

Yeah, we've seen this before. A lot of us protecting turf.

Michael: Exactly.

And just internal politics. It does that. And that's what we saw in the financial services business. And then forget it, it just blew apart.

  • 10:42 - 11:29 John Furrier

Well, the thing too though with the skill set, not only is there skill retraining going on, new roles are emerging. So for instance, the SRE as we've been covering in a lot of these big companies. You've got site reliability engineers pioneered by Google. That's a new role dealing with infrastructure. And as infrastructure as code comes out, it gets fuzzier. What's under the hood? Because now you've got Lambda, you've got Serverless. So that entire program ability is going to put pressure on these old OT stacks. What's your forecast on that?

Dave: And that's what broke the barrier in a lot of these regulated industries was infrastructure - all the developers, to your point, wanted in. And that was like the penguins off the iceberg.

But does that put the pressure on the OT stacks, or does the abstraction at the top drive the innovation? Is it going to be disrupted down here or is it going to be at the top of the stack? What's your take?

  • 11:30 - 12:40 Michael Speranza

So I think... I've seen that tradition in financial services, actually had a front-row seat in financial services in a different role. And the way I saw it actually unfold was having some sort of role that sits between the CFO and the CTO. Someone who's responsible not only for the technical evolution of the architecture but the financial evolution of the architecture that can actually be a compatriot to the CFO, making those decisions. So that's how I've seen it really transition, unless there's buy-in from the top down, it will just be kind of pressure from the bottom up and we'll never see it take hold.

John: If bottom-up, bottom-up will not work unless top-down.

Dave: So it's got to be the top-down, bottom-up is what I'm saying.

John: I mean, what drives that? Does the legal come in and drive that a little bit now because you got a lot of pressure with cyber. So you've got cyber, you got regulatory pressure for Telcos. I mean, these carriers, they get penalized.

Dave: Or are they still blockers. Is that the legal still blocking?

Yeah. We haven't seen legal really enter the decision-making process for us. And you know, for us, we probably wouldn't involve them unless we needed to. Quite honestly, I think it could be more of a blocker - they can always say, no, they can't really say, yes, is our view of that. So, they're an important person to be on the journey, but probably not someone that we would seek to include in the decision.

  • 12:41 - 12:55 John Furrier

All right, Michael, I want you to take the last minute to just take a minute to explain what you guys do. What's your vision of the company? Obviously, you're on the right wave, the wave’s big, you get your surfboards out there you're going to ride the wave what are you going to do? What are the big goals? What are your plans? Take a minute to put a plug in of what you guys are doing.

  • 12:56 - 13:38 Michael Speranza

Yeah. So look, we see the future as a marketplace of Cloud-based solutions. We feel that we're someone that's trying to lead that innovation. I think it's fantastic to see what's happening here right now with CLOUD CITY and giving all the disruptive vendors a voice in the industry that they probably did not have before. And we really see the vision as that open marketplace, where things are leveraging APIs. All of these systems can communicate across the stack and we're going to be part of that journey. We're showcasing solutions here today, around subscriber management to drive ARPU and we've got solutions for managing the customer experience in the home that will increase retention. And really everybody has to just open their minds to learn about what's possible with the Public Cloud and then translate it to how it can actually benefit their business.

  • 13:39 - 13:40 John Furrier

Are you guys looking to hire? Anything you want to share plugged?

  • 13:41 - 13:53 Michael Speranza

Yeah, look we're growing, we've got solutions here that we're looking at positions to customers across the SAC globally, tier one, tier twos, and tier threes. And please come by the booth and visit us and learn about us as a company.

  • 13:54 - 14:08 Dave Vellante

I think John, the big difference between the Cloud this decade and Cloud last decade, there's such an ecosystem now that's built-in that's forming that you can leverage. That was kind of really immature last decade. And it's not just one company going after this. It is the ecosystem.

  • 14:09 John Furrier

Well, the problem, well not the problem, the opportunity, is that the Telcos are going to get punched in the face with the edge now, driving with 5G because now they cannot ignore the fact that you now have Cloud edge that is explosive in functionality, low cost, silicon identity. It's just a game-changer. That consumer technology is coming to the edge and it's going to force new functions so that if they blink, who blinks first, Telcos or Cloud? So Public Cloud's coming like a freight train.

  • Dave: Cloud's not blinking. (laughs)

It ain't blinking, is the freight train. The freight train of Public Cloud is coming into the Telco and if people don't adapt to it, they're going to be toast. And I think the opportunity is for entrepreneurs and founders and CEOs to drive that innovation.

Okay, innovation’s here and we're going to continue bringing the coverage and we're going to go right to the studio where Adam and the team are there.

For more information on how ZephyrTel can support your move to the cloud, contact sales@zephyrtel.com.

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