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| Tien Tzuo, CEO of Zuora |
Over the last 10 years, there has been a dramatic shift in the way both consumers and companies want to do business. Today, people would rather subscribe to services than to buy products. It’s happening globally but especially in the UK. Tien Tzuo, CEO of Zuora, sits down with Comms Business and explains how Zuora has helped some of the telecoms finest make this transition.
Comms Business Magazine (CBM): What have been Zuora’s key growth areas during the past year and what are your growth expectations for the coming 12 months?
Tien Tzuo (TT): Zuora’s growth has been down to what we call the ‘Subscription Economy’. This is the dramatic shift in the way both consumers and companies are seeking to do business and it is having particular effect upon the telecoms, media and IT industries. Today, people and businesses would rather subscribe to services than to buy products. We are seeing a change in preferred ownerships, with people accepting renting as a more practical solution than owning. It’s happening everywhere and is having
dramatic effects on businesses. The seismic shifts in these areas brought on by the Subscription Economy have meant that vast infrastructural changes are required across many long-standing companies. Zuora exists to enable these companies to operate in rapidly developing markets. As more companies review their methods of generating income, there will be further opportunities for Zuora.
CBM: What are the key drivers of your business in the UK?
TT: The UK economy is more proportionally dependent on the internet than any other G20 country. As a result, it is one of the leading countries in the trend of online content delivery. This is a key movement within the Subscription Economy and opens up vast business opportunities for Zuora. The symptoms of this trend feature in British news every day and some of the leading businesses in this area are based here in the UK. Spotify is a great example of the Subscription Economy in action. Consumers are no longer purchasing hard copies of CD’s but rather accessing digital content through the cloud.
As a result, many businesses here in the UK are facing the task of reshaping their business to accommodate the nation’s changing demands. We are now seeing a higher emphasis put on creating long-lasting and recurring relationships with the customer. This comes as customers are empowered to make changes in whatever they decide to use, purchase or subscribe to with a browser. The business transformation that is taking place is how to retool systems and business processes to better align to the customer’s needs.
CBM: What are the three main market trends and emerging markets that are influencing you this year?
TT: The three main trends that we are focussed on are Mobile, Social and Cloud. With customers increasingly mobile, telecoms companies are forced to deal with new challenges of network and content delivery to a nation which expects to be able to access anything, anywhere.
Another key industry trend which is challenging how telecoms deliver their services is social media. Although this may mistakenly seem like something that a company can ignore, the mindset that is brought on by social media is impossible to overlook. Walls that once existed between companies and their customers have been broken down.
The transition to Cloud Computing is enabling both of these trends. It is fuelling the huge growth of cloud infrastructure. With the so many new cloud services forming from consumer, to mobile, to gaming, the question becomes: How do you then monetise these clouds? Unless the cloud can solve the metering, pricing and billing problem, providers won’t be able to monetise their offerings and the cloud will never meet its potential.
CBM: What are your expectations of the UK/ Europe Telco sector for the next 12-24 months and how is this influencing your business strategy?
TT: An annual poll of 105 telecommunications and media providers across 15 countries, taken by Arthur D Little and Exane BNP Paribas, suggests that core European telecoms revenue will dwindle by 1.8 per cent a year every year until 2015. This is obviously a worrying sign for telcos, especially those sticking to traditional methods of generating income, methods which do not account for developments in mobile, social and cloud. Our prognosis is that unless telcos engage value added services they will get left behind forever.
To aid telecos facing this situation Zuora has developed a solution that brings the power of the cloud to communication service providers and enables service providers to launch any type of service from broadband, Wi-Fi, 4G, VoIP, unified communications, and wireless devices services, as well as media services that are delivered over the network such as apps, cloud, gaming, video, and voice services. The solution enables service providers to price and package any communications service, manage customer interactions everywhere, bill and invoice customers in real-time and make decisions based on subscriber analytics.
CBM: What do you see as the biggest challenges/ opportunities in the UK ICT channel and how will you maximise the opportunity and address the challenges as they relate to you?
CBM: Which companies do you work alongside in the UK? Can you give specifics as to how Zuora has interacted with said companies?
TT: The nature of Zuora’s service means that its partners are diverse. However, we have found that the industries experiencing the most impact from the Subscription Economy are those in telecommunications, media and cloud computing.
Our work with Tata Communications in the UK is a great example of telcos branching away from traditional voice minutes into multi-play markets and reaping the benefits. In 2011, they set out to differentiate themselves from their competitors by offering a fully automated, self-provisioned pay-per-use computing and storage solution that provided enterprise-scale cloud computing to businesses worldwide. Supporting telcos in expanding into these areas is a key part of our business strategy.
CBM: What does the future hold for Zuora and their role in the UK market?
TT: Zuora has a very bright future here in the UK. The company has recently opened a UK office and, through the investment of £47m from Index Ventures, is targeting aggressive growth in UK and European markets. We believe that the UK, more than any place in the world has the opportunity to lead transformation and innovation through the development of the Subscription Economy. Zuora will look to support many more companies as they come to terms with the future of product delivery.