Are You Exploring the Value-Added Tweaks Offered by a Service Provider?
Alrighty then. I'm Max Clark. This is a 20 minutes max and I just want to riff on something that came up in email today. And I responded to somebody and I said something that I don't wanna say I mean, it came across really curtain. Maybe, you know, a little mean.
Speaker 1:Right? And the point that I was making was as a service provider, majority of service providers on the market and pick your industry within the IT. Service provider, majority of service providers on the market and pick your industry within the IT space. But the majority of service providers are taking technology that's been created by somebody else. Some somebody is, you know, built a box, written software, done whatever.
Speaker 1:They're taking that tech, and they're and they're, doing integration. They're providing service on top of it, and then they're packaging that up and selling it as a service to a customer. And this is all fine. I mean, this is this is, you know, multi $100,000,000,000 industry. This is, you know, this this is how things work.
Speaker 1:Now in my position, somebody that has to evaluate both underlying technology platforms as well as the service providers delivering that technology platform to our clients and when we give them advice is understanding what the actual USP is for that service provider. And this fits into a couple different buckets for me. But, you know, roughly speaking, if if you're coming to market and you're trying to sell a hosted voice system, so you can call it hosted PBX, hosted voice, UCaaS, unified communications, whatever you're calling it nowadays. Gartner calls it UCaaS, so now everybody we we just call it UCaaS. So in the UCaaS space, if you're a company that has written your stack from scratch, you know, and and these are, you know, the the RingCentral, Vonage, 8 by 8, Zoom, Webex, these companies.
Speaker 1:Right? Then you control your stack and you control your R and D and you control your features and and it's you. Now if you are not that company and you are a service provider doing some sort of integrator work on top of that and you're in the voice space, you are running the majority of them are running BroadSoft. You could be running Net SAPNs. You could be running 3 c x.
Speaker 1:You could be running 2026100 Hertz. You could be running maybe you built a platform from scratch yourself based on, you know, Asterisk or, one of the one of the SIP Express router variants or free switch or, you know, whatever tooling and packaging is out there and to run. Now so this is where things get interesting for me. If we're talking to if if we're working with a client to help them understand which UCaaS company they should use and we're making this evaluation this determination for them when you have a whole just give a ton of companies in the market that are taking a BroadSoft platform and then maybe changing the UI maybe not maybe putting some other skin on it Maybe not but ultimately it's a broadsoft platform that they're going out and they're signed to market What is the value proposition was USP that makes what they're doing with that broadsoft platform better than somebody else's BroadSoft platform versus somebody that wrote their own platform themselves. And, you know, I've got some Legos in the background here from from my, from my boys.
Speaker 1:But, you know, understanding those how those Legos plug into each other and how they work and and where you're delivering value, what value you're trying to actually get to, that becomes you you know, that's how I wanna put that. That's like that's like, you know, painting a watercolor. Right? Like, it's it's no longer about everything's hard and fast. It becomes more of, you know, judgment and soft skills and understanding what the actual service provider is giving or what the client actually needs in results.
Speaker 1:And, you know, and and these things fit lots of different stuff. Maybe it's like today, the the client needs to be able to have local on-site support from the people that are actually running the platform. You know, if you look at that, you know, if we go back to our original list, RingCentral, 8 by 8, Vonage, Zoom, they are not equipped to do truck rolls. Google Voice is not gonna give you the ability to call them up and say, I need somebody come to my office and help me. Like you're just not getting that out of that organization.
Speaker 1:So if you have that need now instantaneously puts you into a different bucket. It's not good. It's not bad. It's just different. And this becomes a nuance that gets lost in a lot of technology purchasing decisions.
Speaker 1:It's those nuances of understanding, you know, what's actually driving the selection process that will never get expressed in an RFP by a committee writing the RFP because You know why why would they and how would they know so right now, you know, cloud is, of course, been the popular buzzword in tech for for for many years now is dominated by Amazon Web Service by AWS. And you have Microsoft with Azure, and you've got Google with GCP, and then you've got Oracle and you've got Akamai by and Linode and you've got DigitalOcean and you've got Vultr and you've got, I mean, and and you've got and you've got and you've got and you've got and you've got and an OVH. I mean, there's there's lots of different companies in these spaces. And then there's then there's really cool platforms, Vercel, Fly. Io, you know, the Heroku, you know, models where they're building tooling and infrastructure on top of somebody else's platform, which is the infrastructure.
Speaker 1:And then they expose or you start talking about an example of the service providers again that are going out to and and acquiring a platform that then they're running and and taking to market to offer services to their to their customers with infrastructure as a service space or or, you know, know know what people are branding like this private cloud ID idea. I mean, they're not all of a sudden branding. It's been branding for a while, but, you know, most of it's VMware vCloud. If you're in the market and you're talking and by the way, you know, this is not to say that VMware vCloud isn't a great platform. This is that's not the point here.
Speaker 1:The point is if you're in the market and you're talking to somebody who is a, service provider using VMware vCloud as their base infrastructure, you know, what is the actual nuance that you need out of that company? What is their USPE? What are they doing about VM or V Cloud that's different that gives you an advantage versus the all the other options in the market offering a VMware v cloud based environment. And, you know, in some cases, maybe that option is just that that nuance or that advantage is just size and scale. How big are they?
Speaker 1:What is their footprint in their, in their v cloud environment? You know, how big is their private cloud? What footprint is it? What data centers they in? How many nodes do they have running?
Speaker 1:What is their purchasing leverage with VMware, which then gets passed down to you? Because if if their unit cost is just lower, their their cost is just, you know, the services cost less. Do you need somebody where you can have on-site support or not? Do you need, you know, specific regions or not? Do you need specific overlays or not?
Speaker 1:Do you need a specific architecture or not? You know, these these are the things become not the, you know, is v cloud the right answer or not? It's it's what tweaks are being put on to v cloud that actually might make it interesting for you or not. Or, you know, are you looking for a service provider that is, you know, writing orchestration layer that can still give you virtualization and give you this private cloud experience, but isn't carrying the cost of, you know, VMware vCloud or Nutanix HCI or these different plug HPE GreenLake and is doing something around, you know, Kubernetes Kubernetes native if you're, containers or, Proxmox, you know, or open cloud or cloud stack or these sorry, open stack or cloud stack or and by the way, you know, you're gonna you're gonna find service providers that are based on on app. You know, again, it's just a lot of these decisions that service providers are making either comes down to a financial position of what tooling that they want to run because it can get a financial advantage or maybe it's a market advantage or maybe it's just, you know, that they in exclusivity.
Speaker 1:I mean, there's there's lots of different things. Right? And and this this again becomes part of the thing that becomes so confusing, you know for somebody out there in the market buying this stuff 25 years ago I was working for a you know for a VAR value added reseller, right? So a computer consulting company and we made money by selling hardware to companies and then selling time and professional services time. So, you know, back then if you were migrating off of a Novell network to know Windows NT 4.0, you're buying the server equipment, you're buying the licensing, and you were buying engineer like me to show up and actually, you know, migrate that data, set up the new environment, make sure everything got copied over that, you know, that that your network worked.
Speaker 1:You know, the hard thing for VARs and this this is also this is a really interesting challenge for service providers because if you if you look at in the VAR, I'll use kind of VAR and service provider interchangeably because the concept and the issue is the same. When you are small, you can provide the highest level of individualized attention to your customer. You can do one off things and you're in and you're just you're not in order to scale, you know, scale becomes standardization. And these are when you see organizations that start narrowing on to a specific niche or vertical or industry or way of doing things. And you know, if you fit into that way of doing things, it's good for you.
Speaker 1:And if you don't fit into that way of going doing things that service provider is a bad it's just not good for you. But now the service providers unit economics, you know, get better with scale. So if you're talking to, if you're in the market buying hardware, and let's just say you wanna buy Cisco because, you know, you know, you've decided to buy Cisco. If you're talking to 2 VARs and 1 VAR is selling, you know, 10 to 20 $1,000,000 a year of Cisco and the other VAR is selling $200,000,000 a year in Cisco, guess who has better pricing leverage for you? Well, working with that $200,000,000 VAR might be really complex and complicated and confusing annoying and not personalized.
Speaker 1:But that that becomes this challenge. That becomes this thing that you have to negotiate and deal with. Dealing with an aggregator who is providing, fiber optic Internet services in in metro markets, an aggregator or reseller or wholesale. I mean, there's, you know, the terminology will just use aggregator. And aggregator is basically, you know, a company that for the most part is buying, underlying wholesale service from, you know, another phone company or CLEC or or or cable company.
Speaker 1:You could go to the phone company and you can buy that service, but you can't, you know, get that cable and whatever it is, but you're not you're gonna deal with the service delivery from that phone company. And if you want, you know, unified billing across different, you know, across all your circuits, you want personalized attention, you want flexibility, you want customization. You want all these different things. This is the reason why, you know, there's this tier of service providers that overlay on top of this underlying infrastructure. And everywhere you look at, you're gonna see that.
Speaker 1:You're gonna see underlying infrastructure and technology, and you can go straight to that source and you can go straight to that whatever it is and you can consume it directly or you can go into another tier. Twilio Twilio is a great example of that, you know, wrote a very easy to consume API for you to interact with the PSTN so you can provision phone numbers, you can send SMS, you can, look up LMP, you can figure out, you know, details on the phone number. You can make and receive phone calls. You can do all these different things. I mean, and Twilio is expanding into contact center.
Speaker 1:They're providing all the, you know, WebRTC gateways and they're doing all this different stuff, and they make it really easy for you to consume. Now the thing with Twilio is Twilio is overlaying underlying infrastructure. So what is what are they overlaying? Well, they're under overlaying the phone companies. You know, if you wanna you want to make a phone call or send a text message to somebody who's on a AT and T or Verizon or T Mobile cell phone user, you've gotta talk to AT and T Verizon or T Mobile.
Speaker 1:And in a lot of cases, the relationship, when you look at this globally, T Mobile might be buying it through an intermediary and not actually going down to Twilio might be buying it from an intermediary and not actually the underlying carrier. So the decision and the the evaluation that you're making now in this case is as you go up the stack, you know, if we if we think about it from the bottom in terms of the actual infrastructure up to the up to the top of the stack, every step that you go here and that you add you're adding margin so somebody they have to make money in order to provide that service and the more layers that you have in that stack you know the the more margin the more incremental cost that you have as a consumer you know as as a consumer of these services that you have to pay. So the advantages of these things, especially when you're starting out, you know, if you're pre product market fit, if you're still small infrastructure, if you don't have infrastructure teams, if you, you know, if you're if you're still trying to figure out, you know, product model or business model or client model or customer acquisition, all these different things, you can move much faster.
Speaker 1:Move fast. Go find the things that make you able to move the fastest. There is an inflection point and there is an inflection point where it makes sense for you to start working your way down the stack. Right? And that's something that I get to do in most of the conversations that I have with my clients.
Speaker 1:Have they reached the point yet where it makes sense for them to go down a tier? Are they they're currently consuming services in a certain way. Does it make sense for them to change how they're consuming the service? Does it make sense for them to go down the stack? Does it make sense for them to get closer to the metal?
Speaker 1:And where do they actually sit and how does that fit into their their actual business strategy? So to come full circle on this one, my email was, you know, was response to this this person reaching out and and pushing their service and, really, their encapsulation of something that they were purchasing, that they had purchased and they were operationalized and that they were reselling as a service provider. And my reaction, of course, was just like, I don't really wanna talk about that unless you've got some some really specific unusual tweak that you've done to it. And I'd love to know what your unusual tweak is. But, otherwise, you know, I know what your footprint is.
Speaker 1:I know where your operating service at. I know what your, you know, your books are. You know, what what what your financial health of your organization is. I know how big your info is, you know, your organization is. Like, what are you doing that's different?
Speaker 1:Is there something that you're doing that's massively different that I should be aware of that I don't know? Or is this something else? And let's not spend time talking about that. Let's been talking about, you know, other things that make you unique as a service provider that actually could produce a value that could really move the needle for somebody. And sometimes these things can be very subtle.
Speaker 1:Like, if you have a client with a 1,000 servers in a data center, right, and these machines are starting to hit end of life, you know, maybe they're 4 years old, 5 years old. And now the now this company is looking at how do they cycle through these things. You know they can recycle you know recycle they could replace you know by going out to Dell and HP or whoever Supermicro and Quanta or whatever and purchasing new hardware and cycling hardware in or they can go to a bare metal provider that can take and assume their existing infrastructure and then start cycling out their equipment with new equipment that the bare metal provider owns and operates and manages. When you look at that thing again you know this this kind of goes backwards I just said you know at some point it makes sense for the company to go down the stack and make make sense for you to go down the stack and get closer to the infrastructure but in other times it makes sense to go back up the stack. You know, I use the phrase like appropriate premium a lot.
Speaker 1:Where is there an appropriate premium by eliminating operational headache and, and levering in a service provider to take over that operational headache, especially if that service provider has already scaled and staffed and, you know, creative processes and operationalize that that thing. There's value, you know, in it for you to go out and and bring on that service provider. And in the case of this one, it was it's a you know, this example, it's it's, it's more it's radically more efficient. Like, I mean, like, it's crazy. It's 87% savings, not, you know, for their their Kubernetes environment, not to be an AWS and EKS, but to be on their own physical servers.
Speaker 1:So there's already such a huge delta for them to go from, you know, being in AWS to being on their own data center or colo. You know, they can afford in in their financials and in their cost to deliver their service. They can they can move up a stack that can take and they can, they can, you know, only use outsource, an operational burden that they currently have. They can pay that service provider margin for it. By the way, that service provider has volume and staffing.
Speaker 1:So in some cases of them, that margin isn't as much as you think it is. It's actually very efficient for them to make this change. And they can focus on their business, and they can still have a huge delta, you know, and a cost advantage for themselves over AWS. I'm having this comp same conversation a lot in the security space where, you know, small service providers just cannot staff and maintain, you know, a security operation center. When you talk about a 247 shift, you know, one person, you know, being available 247 is is actually 7 people.
Speaker 1:You need 7 people on shift. So if you're out evaluating SOC or NOC services, let's just keep it with SOC. If you're evaluating SOC services and you say, like, how many security analysts do you have? And they they come back and they say, oh, we have, you know, we have 2. We have 4.
Speaker 1:We have 7. We have 12. We have 20. Okay. That's interesting.
Speaker 1:Right? You know, you can't even staff 247 shift. You know, people have if an event happens at 2 o'clock in the morning, people's cell phones are ringing to wake up out of bed to go to a console to get, like, to work for you. Is that the environment that you wanna be involved in? You know, or do you wanna deal with a SOC that's actually staffed 247?
Speaker 1:You know, do you wanna deal with a service provider that maybe has a few 100 analysts? Now, again, trade offs. You have to figure out if those trade offs are appropriate for you or not, but that's you know, these are the gray lines that make this very interesting and making and why there isn't, like, a a one size fits all for everybody. You know, I can talk to, you know, 4 different companies and give them 4 different recommendations for the same basic, you know, technology stack. But, the personalization and the customization based on where they currently are, what their what their blueprint is, you know, when we create the blueprint, what their journey is, where they're going, all these sorts things all fit you know, filter into this.
Speaker 1:And, anyways, you know, I'm gonna start rambling here. So I'm gonna stop rambling because I'm at the 20 minute mark. It's this stuff's this stuff's confusing. It's hard. It's not easy.
Speaker 1:Pay attention. Understand what they're what they're selling you, where they sit in the value chain. You know, what makes them unique and special? How are you taking advantage of that? You know?
Speaker 1:What's the advantage that you're gaining there? Are you gaining advantage or not? You know? It's just because, you know, you know, you you know, somebody just met somebody. You met somebody at a party, and and now you're in a meeting.
Speaker 1:You know? Is and that happens a lot. Is that where wanna be? I'm Max Clark. That's 20 minutes Max.
