Sramana Mitra: What other areas do you have interesting perspectives on?
Ken Stephens: One of the things that the cloud positions us to do is to move into regions where we haven’t played before. ACS, as an example, before being purchased by Xerox, was largely a U.S. company. We did some Europe and some Asia and Latin America, and so on, but certainly 85% of our revenues were in the U.S. In the cloud space, we’ve already gone to Asia, and we’ve already gone to Europe. I’ll be in Latin America [soon]. Cloud services position people to go global much faster than traditional services ever dreamed of. The question turns into, which regions can you make money in? How do you deal with the challenges of different legal entities?
In Switzerland, as an example, you can’t take any financial data out of the country. If we put it in the cloud, I can take it out of the country and you won’t even know. How do you deal with those legal issues in the cloud? That’s quite complicated. We’ve been watching that pretty closely. That horse has not run its race yet.
SM: I think the Latin America story is developing nicely. India has developed nicely. Although I’m not quite sure about the cloud penetration in any of those regions yet. I follow India [closely]. I follow Latin America less. But I definitely follow it somewhat, and I follow India aggressively. A lot of the vendors keep telling me that we still have to meet people in person to sell them technology. One of the beauties of the cloud solution was that it is very convenient to be able to sell products and services without actually meeting people. You can sell them with Web demos and the phone and so forth because the denomination of how much customers spend on transactions is relatively lower. In India, the entrepreneurs complain that [other] entrepreneurs aren’t willing to buy without meeting with the vendors. And that does not take advantage of the cloud model as much.
KS: Yes, and we suffer a little bit from that to this day as well. We’ll get … to my point about we’re selling to the SMB customers, and we’ve been successful selling to the SMB customers, but some of them want us to come out and spend time with them and educate them. We’re happy to do that, but when you’re talking about a small transaction, your cost of sales can be problematic.
SM: Right. Part of it is if you can offer a price point that makes technology affordable and available at a much lower price, you’ve got to cut down on the cost of sales. Otherwise, you cannot deliver at that price point. From the customer’s point of view, you can’t have your cake and eat it, too.
KS: That is exactly right. I tell that to my salespeople all the time.
SM: Because you’re talking about the broadening of markets, in principle, yes, the market is broadening. But the market is also creating its own problems by trying to have the cake and eat it, too.
KS: Yes. It’s quite the challenge. We have what we believe are some really great service offerings that will work well in the SMB space, but some of those customers are not very decisive. They’re like, “Well, we want you to come out. We want you to talk to us. Blah, blah, blah, blah.” And I’m going, “Look, I’m not putting people on a plane to fly over there to talk to you about this.”
SM: Right. I don’t understand why people need to see other people. Given video conferencing, the phone and Web conferencing and all these methods of communication nowadays, what is the advantage of seeing somebody in person?
KS: I make that argument on a routine basis. Now, I’m four million miles on a plane, so I don’t care to ever get on another plane. But people still like to sit down face to face.
SM: Well, on that note, we’ll wrap up the conversation. Thank you for taking the time.
KS: Yes, it was nice talking to you. Thank you.