Compared to companies in other industries, telecom companies were already well into digital transformation, providing the infrastructure we all need to stay connected. But almost overnight there was a greater demand for connection. Yaron shared that we are seeing telecom companies becoming more advanced, more digital, more open, and enabling a different level of support. Companies have had to move to a cloud environment that enables them to react much faster than before. And we likely will keep building on this moving forward.
Cloud adoption trends
Yaron shared that previously many telecom companies were laggards when it came to cloud adoption. The two biggest barriers to adoption were security risk and operating costs. Companies were used to storing everything on-prem where you could guarantee security and you had a capital expense. But now, these issues are becoming less relevant as it becomes more imperative to operate in the cloud. Yaron also shared that every company plans their journey differently and many now are in the middle of their migration process. It’s an exciting time in the market.
Hybrid cloud management
Yaron explained that the immediate future for many telecom companies will be some sort of Hybrid IT architecture. These large enterprises have an extensive list of applications and programs that will be costly to migrate completely to the cloud so for the foreseeable future many will use on-prem and off-prem solutions including multiple public clouds. Managing the migration and the operation of this new architecture will be complex. Amdocs offers a Hybrid Cloud Management Platform which allows companies to manage all parts of the migration process.
The financial side of cloud migration
Yaron and I discussed that in addition to moving to a hybrid cloud architecture, service providers are moving FinOps tools to the cloud to be able to better serve customers. Companies are starting to build FinOps tools that use AI to determine how resources are being used and how that relates to KPIs. This will likely change the way we operate, helping companies be more efficient from end to end.
Building infrastructure on public clouds
Lastly, we explored the recent AWS Amdocs partnership announcement and their ability to run on any public cloud. By working with AWS and Azure, Amdocs understands how to get the most out of the cloud in a cost-effective way. These partnerships eliminate the barriers to adoption that many companies were dealing with. It’s a smart move for everyone involved.
Daniel Newman: Welcome to the Futurum Tech Podcast. The Interview Series. I’m your host today, Daniel Newman. Principal Analyst and Founding Partner at Futurum Research. And I’m excited about this interview conversation that I have today. I’ll be joined by Yaron Sverdlov of Amdocs. And we’re going to be talking about the service provider. The journey that these organizations are on. Digitally transforming their businesses, their operations, the financials. And the way they’re moving their services to the cloud. It’s going to be a really fun conversation. So we’re glad to have you here. Yaron Sverdlov, welcome to the Futurum Tech Podcast Interview Series. How are you doing today?
Yaron Sverdlov: Hi, Daniel. Thank you very much for hosting me here today. I’m very excited to share some of my insights working for Amdocs. A few words about who I am. I’m the General Manager of the division called SmartOps, within Amdocs. Amdocs is a company giving solution and services, to telecommunication companies. And my division is the one doing the operation for customers. So my customers are typically large telecommunication companies. Like AT&T, T-Mobile, Bell Canada, and so on. And basically we are doing everything from, running data centers, to doing the BPO.
Daniel Newman: Well, welcome to the show, Yaron. Really excited to have you here. I’m sure everybody out there consents that you’re calling in from somewhere other than here in the States. So I always like to tell people, where are you? We used to actually see people in person. We used to go to events together. We would shake hands. I actually met the Amdocs team for the first time, in Nice France, for the Digital Transformation World event. But you are where today?
Yaron Sverdlov: I’m living in Israel. Typically, in normal days, I will tell you that I’m somewhere around the world. Because I usually just travel all the time. But with the COVID-19 coming up in the last six months, I’m located back home in Israel.
Daniel Newman: Absolutely. I think we’re all at home. I always tell people Yaron, I traveled 47 to 48 weeks a year. I did over 200,000 air miles, almost each of the last four years. Four to six continents a year. And this year it went from crazy travel. I think I had almost 49 weeks booked already, in March when everything shut down. And it’s just been the weirdest thing. It has. It really has been weird. But we’ve seen, and I’m sure you have too, that despite the unfortunate circumstances, that have been caused by this pandemic. Digital transformation, and technology adoption has accelerated rapidly. And we are doing a lot more Zoom meetings. But there’s a lot more to it. And we’re going to talk about that today.
Yaron Sverdlov: Yeah, you’re right. We are doing things differently. And for sure, the COVID situation pushed digital transformation, like nothing else has pushed. I’ve seen that it’s not just that. In general, we had to cope with something which was totally new. And therefore we have needed to challenge all of our paradigms. We could not continue to do business, like we’ve done in the past. So we needed to reinvent ourselves and I’m talking about we, but this is the entire world. So, slides have stopped. Zoom becoming our day to day, most useful tool. And, digital is a must. It used to be a very good tool to increase sales, and to give good services. But today it’s just a must.
Daniel Newman: It’s absolutely reinventing so many businesses. And as a company that works so closely with so many of the world service providers, I’m sure many are turning to Amdocs. And to your team. To help them digitally transform their businesses. Working so closely with the service providers around the world. And transforming your own business. Moving and working to migrate more of your partners to cloud, and reinventing operations. All the things I talked about when I introduced the show. I guess I’m first and foremost, just curious. How has this global pandemic influenced your service providers, their digital transformation, and what they’re investing in today?
Yaron Sverdlov: So I would say to start with is, that the communication companies were lucky, relatively to others. Because their core business, of getting us connected, is becoming mandatory. More than ever. We are doing these forecasts from Kosovo, using connectivity. But this is becoming our day to day. My all day, I’m working 12 hours a day. Just jumping from one Zoom meeting to another. The situation that I have to have, a very strong connectivity at home. More than I was depending on before. So from that point of view, I would say that the telecommunication companies, have people who are going to look at them and say, “Okay, they were not impacted like the flight companies, or hotel industry.
However, to keep in business, they have to change.” Many companies will be counting on their reach to the market, by having shops. And they might have call centers that talk in a specific way, and less of a self-service type of operation. Obviously it’s changing in different continents, in different countries. You can imagine that when I look at the US market. It was much more advanced than when I look at India. But the problem is global. And us as a global provider to telco all around the world, we see the need to become more advanced. More digital. More open. More self-service. And enable a different level of support. So this for sure was one of the shifts that we are starting to see. We see countries which were less depending on digital channels. And more of traditional channels, moving to the digital channels as well. And we see it all across the world, in one way or another. But obviously the developing world is more focused on that. In parallel to that, we see the need for additional ability to ramp up services fast. To react fast to a very, very fast changing market.
And with this, companies that have not yet started the journey to the cloud, all that worked in their motivational ways, had to move to an Agile DevOps. A cloud environment that enables them to react much faster. Anything that we knew six months ago has changed. But it’s not like six months ago, we understood already how the companies need to operate. And we’re just doing it from that time on. We are coping. We are changing all the time. And this space is changing.
When I talk about changing the telecommunication companies, we need to keep in mind, 70 years ago, we had mobile. What mobile was, was basically a mobile phone making calls. Not even SMSs. No one thought, when we talk about telecommunication companies, about the media, about TV. No IPTVs at that time. TV was either cable or satellite. It was a very different world. It took probably 10 years, or 15 years after we started to have the first mobile calls, when we moved to SMSs. And then another five to six years, when we started to do data. And we had the first iPhone. And we started to look at YouTube. And now we’re doing so many services.
Daniel Newman: It sounds like the COVID-19 pandemic, has really pushed the digital transformation initiatives you’re on. And that’s exactly what we’ve seen in Futurum Research. We’ve been watching. It’s been across the board. Obviously connectivity has been the underpinnings, of enabling society. The fact that we’ve been able to continue to have these meetings. Schools have been able to continue to function, with remote learning. Workplaces, and enterprises, are able to stay connected with our customers. E-commerce has been the outlet for so many companies, that couldn’t open up the retail stores. It’s also been a tool to allow takeout food, to replace dine-in and restaurants. And so on.
So connectivity is more important than ever before. This put a lot of pressure on the backbones of service providers. These service providers are the ones that deliver the connectivity. This means pressure on operations. Pressure on the financials of these companies. And pressure on the service. And the quality of service.
And you alluded to, we already knew that cloud, for instance, was going to be an investment that needed to be made. This wasn’t actually a surprise to anyone. It was just the feeling going into 2020 pre pandemic, was there would be time. There would be time to evolve. It could be done gradually over the next few years. Roll outs of services could be done gradually. Moving to NFV for a network function virtualization.
Moving to software defined enhancements. It was something that could be done over time. Now that time’s out of the question. So cloud for instance, so important. And you mentioned this. But, the service providers, what are you seeing? Are they able to make this migration? Are they speeding it up? Are there big inhibitors? What’s been the trends that you’re seeing, in terms of hybrid, and multi-cloud adoption.
Yaron Sverdlov: That’s a great question. I think that when I look at the direction of the telco going in the cloud, I think that you’re right. Up until a few months ago, obviously there were the first few grades. There are always those that go [inaudible] and do the changes. But plenty of them were just lagging behind, waiting to see what to do.
Typically, when you come to talk with a CTIO or CIO company, you will hear about two reasons, why not to go to the cloud. One will be security risks. Another will be the fact that they felt they were going to give a blank check to, the cloud companies. And they have no control of that. When they used to use their own on prem, they knew. I’m buying Celltel, this is my cost. I cannot overrun my cost. Now suddenly we’re going into a much more riskier environment.
All of that becoming less relevant, when you are risking your business. If you cannot fund your business, then having a risk of security, a risk of having a big bill at the end of the month, is less important, I guess. However, also we see much better maturity. I would not say that we are fully matured there. But we see much better maturity in the market, to tackle those issues. So whether it’s security, whether it’s a FinOp barrier, we see that those big barriers are lifting. And we can move on. And also really the question that I hear typically, when I’m meeting those companies, is, “Okay. We want to go to the cloud. But obviously we cannot go with the outrageous applications that we have currently. And to more or close our data centers. So the next question typically is, where to start? What to go first? And also a little bit, it’s not one answer, that answers this for everyone. Its different companies, with different styles.
I see companies that are moving to… Most of them probably moving to digital first. Through all the new stuff, that they do move fast. And they want to be very agile. They will move them first. All the new products will be micro services, on the cloud and so on. But at the same time, we all understand everything is very well connected. And if you keep your legacy on, and not lift and shift it in some way. And do some additional capabilities on it. So you’ll probably need to modernize a bit. You will not be able to gain all the benefits, that the cloud environment can get you. So we see different models. We see different approaches. I don’t think there is a one telco in the world today, after the last six months, that is not in the middle of their, or in the beginning of their journey to the cloud. So we are in exciting times. That’s a great place to be in the markets.
Daniel Newman: And you mentioned, there isn’t one. And that’s got to be a great opportunity for Amdocs. Because where you sit as a trusted partner in this type of migration to the service providers. And I want to hear more about that. But you mentioned a couple of things that actually really caught my attention. The first thing you mentioned was security. And I think that’s such an important topic. It maybe isn’t being discussed that much. But as we’ve created a world that remote connectivity is everything, security has become a much bigger vector of problem and opportunity, for the bad and the good. Companies need to be much more careful to protect data. Protect assets. Service providers are of course, going to be in the middle of that. So being able to support their needs, is going to be something that they’re going, to really be looking for firms like yours to help with.
Now, the other thing you mentioned, and I’ll give you a chance to address both of these things, is operations. So just wanting to move to cloud. Like you said, everyone’s doing it to some extent. Some have moved, and really are fully, or very close to having fully developed cloud operations. And are doing this day in and day out. And delivering almost all of the services in that capacity. Others are in various stages in between. Still doing a lot of traditional service delivery, and everywhere in between. So one of the things that I’ve learned about what you’re doing at Amdocs is, you’re really focused on engineering driven operations. You’re focused on that backbone, in terms of being able to support this journey to cloud. This journey for digital transformation, and hybrid IT. So talk a little bit about the importance for service providers, to prioritize using engineering driven operations. To actually accelerate this migration to cloud, this digital transformation. And to adopting hybrid IT across their cloud and data center and environment.
Yaron Sverdlov: Okay. I think that you touched a very important point there. Hybrid IT is where most of those companies will be in, for the next quite few years. I don’t believe that we’re going to see many companies. There will be few, that will be all cloud. Not when we’re talking about corporates that have been there for 20, 30 years. They probably have a long list of applications and solutions. It’s going to be a huge expense. I’m not sure that there will be a full return on investment, to go to the cloud with everything. It’ll require time. It’ll require processes. So we’re going to see a hybrid solution for a while now. When we talk about hybrid, there are two dimensions for that. And we need to keep that in mind. Hybrid on one end means, I own prem and off-prem. So on prem, your data center. And off-prem, meaning the public cloud.
And when we talk about hybrid, we’re also talking about multiple cloud. And the obvious names, being Azure, or Amazon, or Google. But it’s not just them. There are many other cloud providers. And we’re probably going to see, that as we go into the more aggressive migration to the cloud, not a single cloud approach by any of the customers. But rather, multiple companies will go to multiple cloud providers at the same time. And operation from that point of view, is going to be very complex. Because you need to triage issues, cross different domains. You need to be able to have a single plane of glass, to be able to see what you need to do. And with a very, very dynamic environment. Where systems are scaling up, scaling down. Jumping from one cloud to another. You need to be able to control all of that.
And for that, companies like Amdocs is bringing into the picture, what we call the HCMP. The Hybrid Cloud Management Platform. That allows you to manage the security that you mentioned before. Which is very important. The xeno parts. And also the positioning, and the rollout. So when we’re talking about the cloud, we’re definitely going to see a hybrid approach. But by most of the customers. And we’re going to see an operation, that is going to be much more complex than ever before. I do want to say, that on the journey to the cloud, operation is the last stage. And we should not underestimate the complexity of it. And we need to be ready for it. But you also need to remember that, there a couple of stages before. Planning what to migrate to the cloud. And then do the migration itself. And whether we do it in a one stop shop company, like Amdocs. Or you’re doing it with different advisers, and do the oppression itself. You need to be prepared.
And when we are talking about preparation, we are talking about always three factors. We talking about the people. We talking about the processes. And we’re talking about technology. And I kept on talking about technology until now. Talking about the different cloud operations and so on. But we also need to understand, that both the people and the processes, which are currently running on prem, will not be able to just move to the cloud, in a sweep of a keyboard. And the complexity will be, that they will need to do both at the same time. They will need to run the on prem operation, and cloud operation, for quite a few years from now. So I think that companies that will succeed, and will try and the move to the cloud, and we’ll enable themselves to go through a successful digital transformation, will be companies that will train their people. Build the processes. Bring the technology. And the same time, be ready to walk it out in a hybrid mode. On prem off-prem. And when we’re talking about off-prem, of course different cloud providers.
Daniel Newman: Yeah. You make a lot of great points. And of course, I think there’s going to be the human aspect, and there’s going to be the machine aspect, Yaron. And so, as you build out these practices, we’re going to see big investments in these operations. And we’re also going to see significant investments in data automation, artificial intelligence. That’s going to enable typical routine processes to be expedited. That the cloud and the underpinnings, the architectural underpinnings will make these service providers more efficient, in getting things.
Identifying anomalies. Things like fraud, or things like connectivity issues. Getting things repaired and backed up quickly. And I think it’s going to be that combination. We’re going to be able to up level the entire operation. Up level the entire customer experience. And really help service providers bring that next generation, of not only connectivity, but reliability. That comes with these upgrades.
And I’m sure that’s something you guys at Amdocs, are thinking about every single day. I guess I’d love to touch on something else that’s really important too. And something that’s important to your business. And that’s the financial side of this, for service providers, and for the industry. The tools to manage an engineering, and deliver operationally is important. But the other thing that really going to the cloud hybrid IT architectures, and modernization is to, optimize the ability to deliver services. To charge appropriately for them. To track them, to monitor them. How important is this particular aspect, the moving financial management, and FinOps tools to the cloud? To this service provider industry, to be able to really move forward to that next generation of delivery of service to customers?
Yaron Sverdlov: I think it’s nothing else than monitoring. I don’t think that we can see any company go all the way in. Going with a massive cloud transformation, without building the FinOp part near to it. Now, obviously there are companies that give this service, as a part, which is disconnected typically from the operation itself. I can probably mention a few of them, like Cloud Ellis and so on. By the way, also the cloud itself, the provider themselves, today bringing some cloud FinOp type of solutions. However, I think that it’s not about the technology, or the tool, it is more about the processes that need to be accompanied. Understanding what you should want me to do with that. So for example, I give a simple example that I saw about a year ago, which was the Black Friday.
So you are a telco, and you’re running your operation on the cloud. And you suddenly in the morning, see there is a huge height in cloud usage. Is it a problem? Well, if it’s Black Friday, it’s probably going to be something that you are enjoying from it. Because, it’s actually showing you better sales. So therefore, the artificial intelligence part, of the FinOp. And understanding of the business side. Not just connecting these to how much you’re using. But also how much you are enjoying. What’s your benefit? What’s your business KPIs? Connecting the business KPIs, to your FinOp is mandatory to make a strong FinOp solution. And I think this is where you see the maturity level grow. So a few years ago, we all knew how to deal with a bill at the end of the month. And we use some tools to see, where the bid is going a wrong way.
We then move to see annuity. We suddenly see a specific part of the system scaling up, using more and more resources. And it is not as typical as before. Then we start to see the artificial intelligence. That actually identified those abnormalities, and try to connect them to other things. But I think that only in the stage, where those will be connected to the business KPIs. To actually what is required for the business to scale up, or scale down, or change. I think that will be a real FinOp. So controlling financially an application, without understanding the actual need of the user of the system, is very limited. And I think that this is where most of, this stage, I see that in the coming year or two, we will start to see a much more advanced FinOp. That is accompanied with a very strong AI.
And I think that AI in general, is the biggest change that we will see in the way that we operate. Because it will allow self-healing. It will allow self-service in a more advanced way. It will allow the system, to introduce new features in an automatic way. This will support us to be more resilient to one end. To be more efficient on the other end. But at the same time, allow us to run at the state, that the business requires to run. And this is the formula. Because, if you are building resilience, and you are building financial variance, without having the ability to support the business. Then you’re doing it wrong.
Daniel Newman: Absolutely. And so we only have a few minutes left, Yaron. But I want to ask one other question. Of course, the hyper scale cloud, the AWSs. The Azures. The Google, GCPS. IBM’s. Oracles. They’re all garnering a lot of attention. Public cloud while it’s been a migration, and we’re still in its infancy, I believe in a lot of ways. Less than a third of workloads are in the public cloud. Amdocs you’ve turned to the public cloud. You’ve announced partnerships. I recently attended a webinar that you did with AWS. An announcement. I’d love to understand a little bit about the thinking of your firm, in terms of partnering with public cloud providers. As I think a lot of companies are wanting to make sure, they’re building infrastructure, that’s going to be on these public clouds. That’s going to utilize and leverage these public clouds. And so if you touch on that a little bit, or maybe a couple of minutes. I’d love to hear what Amdocs’ thinking is behind that. Before, we wrap up today.
Yaron Sverdlov: When you look at the Amdocs solution. We have the ability to run on basically any cloud. And if a customer comes and tell me, “Yaron, I need to have our system running on IBM. On Xiomara solution. Or On Google.” I know I’ll be happy to do that. We have the ability. We try that in a week. We run it on them. We know how to do it. That shouldn’t be a problem. However, we did think that cooperating with cloud providers, and we’re doing it both with Amazon, and with Azure, will bring us to a new level of relationship. And we could be able to offer solutions to customers, which are more integrated within the cloud itself. So first of all, we are running all the certification. We’re doing all the processes to have the ability to do many services on the Amazon and Azure.
We are working very closely with both companies there. We are the resellers of Azure and Amazon. So if you come to us, and you want to buy, twice the capacity. What we’re trying to do is not just selling you the capacity. But actually because we are running our own systems, we can ensure you that how much you’re going to spend. And basically if you remember a few minutes ago, when we talked about the barriers. We talked about the costs, and about the open checks. And the fear was, how much we’re going to spend. So really, if I’m giving you the capacity, and I’m giving you the systems, I can control how much I can commit, and how much you’re going to spend. So this is definitely a benefit of getting a relationship like that. That allows us to understand better, how to control, how to get the most out of the cloud.
And obviously I think that today we have so much to learn, from the cloud providers. You mentioned engineering ability. We are running SRE. Which is originally from Google. For site reliability engineering. That’s the message that we are using to make sure that our system is resilient. Our service is stable and resilient. We learned that from companies like Google. And we implement obviously, to fit to telco company. But I think that if we look at the cloud providers as partners, you have so much to learn from them. And you have so much to gain from them. But I think that Amdocs has a lot to enjoy from this relationship. And we are enjoying it.
Daniel Newman: Absolutely. And those are great answers on your own. Thank you so much for attending, and being part of this podcast today. I have no doubt that the future of enterprise, and service provider connectivity is going to be hybrid. It’s going to be taking the best of breed. That’s been seen with the way of cloud is continuing to develop. And the way it’s being utilized, and rolled out. It’s going to be very similar in the service provider, and communications businesses. And I’m sure Amdocs will continue to participate in a very meaningful way.
So Yaron Sverdlov, thank you again. Thank you Amdocs for being part of today’s Futurum Tech Podcast Interview Series.
Yaron Sverdlov: Thank you Daniel.
Daniel Newman: For everyone out there, please check out the show notes. We’ll provide you some links to learn more about Yaron. The team over there at Amdocs, and what the team is working on. Also hit that subscribe button. And stick with us here on The Futurum Tech Podcast, for our regular weekly shows. As well as our interviews with leaders, from tech companies around the world. We really appreciate all of you that tune in every week. Or that tune in regularly. You can find us on Apple. You can find us on Spotify. And of course we have video, and audio content on YouTube. And across the internet, and social media. For this episode of The Futurum Tech Podcast Interview Series, I’ve got to say goodbye. It’s been fun to be with you. But we’re out of there.