EXCLUSIVE INTERVIEW: Fuze CEO Steve Kokinos on the future and the cloud

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UCinsight caught up with Steve Kokinos, CEO of unified communications as a service (UCaaS) provider, Fuze, at UC EXPO, where the company was showcasing a new desktop client that unifies voice, video, messaging, and collaboration for individuals and groups.

We asked him about the success of the recent rebranding, about cloud communications and security… and about how complex local politics in the UK and Europe may make life difficult for US providers.

In February, the company ditched the ThinkingPhones moniker that had served it well for a decade, to reposition itself as Fuze for today’s more collaboration-centric, flexible workplace. So, two months in, how successful has the rebranding been?

“Overall, the response has been very positive,” said Kokinos. “The rebranding gave us the opportunity to reassert to the market that we have a modern solution. A big part of the decision to rebrand was that voice dominates too much of the discussion, and that having ‘Phones’ in our name felt limiting. Voice is part of our story, and an important part, but today it’s also about messaging, video, and collaboration.

“At the same time, it’s about the number of applications that we can displace out of the legacy world – including PBXs, legacy messaging apps, audio conferencing, videoconferencing hardware and services, and collaboration tools like WebEx and GoToMeeting.”

Alongside the February rebranding, Fuze secured $112 million in new funding, suggesting that the new name was part of a single deal to reposition the company for the future. “That’s really the last big round [of investment], pre-IPO for us,” said Kokinos.

So is IPO an imminent possibility? “I meant the likely IPO,” he stressed. “We’re not in any hurry. We think it’s a step along the way. In the next 18 months to two years we’ll start looking at it more seriously.”

European plans

Was the investment primarily to expand into Europe, as was reported at the time?

“We started our investments into Europe in 2014, and in 2015 Europe represented over 25 per cent of our business. We now have a staff of over 125 people in Europe and are continuing to grow. So, yes, European expansion is underway. But the investment also allows us to expand globally.

“We’ve opened three data centres in Hong Kong, Singapore, and Sydney. One of the things that we’ve found is that our customers, increasingly, are global, especially the type of customer we’re focused on – organisations larger than 250 people. Our average customer is 1,000 users, and our largest customer is tens of thousands.

“We’re also going to be investing in Latin America. As of today, there are 38 countries where we offer full support and unmetered packages, and we’re going to expand that. We have unlimited calling to 120 countries within those plans.”

So the rebranding was part of a move upwards into larger enterprise customers, perhaps?

“We want people to have more of an open mind, and it gives our reps a chance to broaden the discussion more easily,” Kokinos explained. “But at the other end from calling, we see an opportunity to change the way people communicate at work. What we see out there are 400 million users [sic], but less than 10 per cent of them have migrated [their communications]to the cloud. Specifically in 1,000+ enterprises, only three to four per cent have migrated their communications to the cloud. So even though there is scale being generated, there’s very little migration.”

So why is this? Is it a cultural challenge?

“The two most critical elements are understanding the motivations of CIOs and IT staff in general,” said Kokinos. “They have a lot of concerns around what the rest of the organisation is doing, and in some cases they worry about job security. And that’s not a recipe for transformational change.”

“But the heart of it is, in the past moving to cloud meant you might be getting convenience and simplicity, but you were also giving up functionality that represented business processes that had been tweaked over years or decades to represent how people communicated with their customers. So changing that has been something that people were very hesitant to do. So we’ve focused on getting people from their legacy systems into the cloud in a way that isn’t disruptive to their processes.”

How does this play out in many organisations?

“We find that once you get them to make that jump, they change behaviour very quickly around video, analytics, and so on. People will spend a whole day in a video session, and text each other to look up [at the camera]and chat. User cases like this just didn’t exist before when people had to choose between four or five different discreet applications. I think that silo approach is what leads to user dissatisfaction and that is why a lot of processes haven’t changed.”

The user experience is also driving people to think about UC differently now, claimed Kokinos, and so while the initial buyer/supplier conversation might be about replacing the PBX, or a video conferencing facility, it rapidly broadens into a discussion about user benefits and broader collaboration opportunities in the cloud.

Thinking clouds

But do users think enough about what the cloud really means? People readily say that they have put their communications in the cloud, or their documents, as though ‘the’ cloud is some universal fog of code floating in the stratosphere. But the reality is that cloud computing is about hardware, about renting space on data centres in different parts of the world.

Those local issues, such as the different attitudes to data hosting, transfer, and security that exist between the US and Europe, and between the UK and Europe, are not minor issues. Does Kokinos believe that people think enough about these aspects of locating data outside the organisation or their home country?

“There are two audiences. For the IT people, they need to care about those things a lot. It’s about understanding quality, security, and data privacy, which is a big concern at the moment. All of those things need to be addressed by the cloud provider, and by IT departments, at enterprise level. But from an end-user standpoint, they don’t care how any of it works, only that they’re getting the experience they want.

“The benefit for an end user of a cloud application is that we’re constantly improving our applications and we are using all of our user base to teach us what works, and what doesn’t. If you go buy an on-premise system, the thing it does today is the same thing it did on the day you brought it in. There’s a high velocity, iterative approach to improving our applications, and that’s why end users should care.”

Does the UK have its head in the cloud?

Locally in the UK, does our patchy national infrastructure get in the way of cloud technologies’ potential expansion, and of the supposed ease of use, agility, and scalability of cloud platforms?

“There are two answers,” said Kokinos. “Answer one is that the majority of enterprises have private corporate networks that have QoS attached, and we have network-to-network conversations with the major carriers so they can extend their networks to our data centres. So for most corporate locations, it’s a non-issue and no different to the situation in North America and elsewhere.

“But on the broadband side, to which I would add LTE and mobile networks, one of the things we have seen, for sure, is that as we deliver desktop and mobile apps, people expect them to work out of the office just as well as they do when they’re in the office. So dealing with the challenge of different networks, and networks of different quality, is something we spend a lot of time thinking about.

“And the way you deal with that is to architect the clients in the right way. Understanding how to be resilient when there are poor network conditions, and how to maintain audio of high quality when the network is degrading, is an important thing for us. And it’s the same for video, where there is an opportunity to be best in class.”

“It’s about engineering clients to be very resilient, so that when you have a questionable broadband connection or a few bars of LTE, then things will still work properly. Understanding both use cases and optimising around both is not something that many vendors do today.”

Sticking with the UK specifically, might the strained relationship between the UK and Europe complicate things for US companies in the future – including a possible ‘Brexit’?

“We’re a pretty international company. We have 75 people in the UK and a data centre here. From our perspective, whatever externalities happen, we have many customers here and will continue selling here. It’s up to vendors like us to work out the complexity and make it simple for our customers.

“Whatever has to be done in terms of data privacy and the regulatory environment, we just have to make sure that we have architected our infrastructure in such a way that the market will accept it. Whatever happens in the European Union, it’s just up to us to figure out how to make it work for our customers.”

About Author

Chris Middleton

Chris Middleton is a widely respected business and technology journalist, author, and magazine editor. In recent years he has been Editor of Computing (where he remains Consulting Editor); co-founder and Managing Editor of Professional Outsourcing – a magazine he developed from scratch and grew to be the leading magazine in its field; Editor of CBR in its most successful year; and co-founder and launch Editor of Sourcingfocus.com. Today, he is co-Director of EastwoodMiddleton Publishing, and founder, designer, and Editor in Chief of Strategist magazine (UK), the boardroom magazine that provides strategic insight for business leaders, and of its mobile-first digital edition at www.iamtheStrategist.com. He is also co-founding Editor of Child Internet Safety magazine, and a contributing Editor of Diginomica.com. Over the years Chris has also written for, among many others, The Guardian, The Times, the BBC, and Computer Weekly. He is the author of several successful books on digital media, and a commissioning editor of more than 50 books.