QIC- CEO Conversations Installment IV: MP Tsai, Founder and CEO of eCloudvalley (6689 TT)

If one were looking for the measure of just how far Taiwan-based eCloudvalley has come since its founding in 2013, there is no need to look any further than its No. 15 ranking in ChannelE2E’s Top 200 Public Cloud Managed Service Provider (MSP) list for 2019 – especially when it is taken into account that the companies at the top of the list are mostly global IT service giants such as Accenture and Rackspace. Furthermore, eCloudvalley’s customer base includes the government organizations, state-owned companies, international financial institutions, large-scale retailers and technology companies. On the surface, it seems that it would require a leap of faith for such large-scale customers to depend on a company that is just past its 6th anniversary to help migrate their data to a public cloud. Yet, it is a testament to eCloudvalley’s expertise in the MSP space that so many large organizations rely on them. ECV has not only made Taiwan’s cloud service capabilities evident to the world but has helped to break the stereotype that Taiwan is competitive only in hardware.

To achieve its current position as Taiwan’s pre-eminent player in the cloud services space, eCloudvalley began developing its proficiency in the Amazon Web Services (AWS) ecosystem at a time when most companies were still unsure about how to migrate to public clouds and what the benefits of doing so could be. In 2019, after five years of rapid growth, eCloudvalley’s cloud services revenue reached NT$2.5 billion (US$85M), accounting for nearly 40% of its consolidated revenue, and having grown over 245 times over its 2014 scale. The driving force behind this excellent performance is Founder and CEO MP Tsai and his staff of over 200 talented young cloud services experts.

Not satisfied with one No. 1 ranking, MP and his team crave many more

Looking back, it was actually the enterprise storage distribution portion of eCloudvalley’s business that inspired MP to enter the cloud service business. Prior to starting his own business, MP accumulated many years of operational experience in the hard disk drive industry in China. So, when starting up his own business, MP established Allianz Vantage in 2012 (now the enterprise storage division of eCloudvalley), which is now the largest enterprise storage distributor for Western Digital in Greater China. The division accounted for roughly 60% of eCloudvalley’s consolidated revenue in 2019. “In the early years of Allianz Vantage’s existence,” says MP, “We observed that the majority of our enterprise storage products were being shipped to datacenters. Therefore, after AWS launched its services in Taiwan in March 2014, we began building relationships with AWS; and were chosen amongst their first batch of AWS partners in Taiwan.”

eCloudvalley’s first AWS-related offerings were streaming services. Says MP, “Our first major contract was for the live streaming of the November 2014 Debates between Taipei Mayoral candidates Wen-Je Ko (柯文哲) and Sean Lien (連勝文). Thinking back on it, it is hard to believe that no other service providers knew how to do live streaming at that time. We were the only one that offered such services.” After eCloudvalley’s success with that project, MP went to China to discuss eCloudvalley’s future development with Alex Yung (容永康), the Managing Director of AWS Greater China at the time. As the streaming business required government approval in China while the MSP business did not, Mr. Yung suggested that eCloudvalley pivot its model to becoming an MSP. After an internal evaluation, eCloudvalley made the pivot, officially becoming an AWS MSP in May 2015. Says MP, “Our 2015 cloud revenue increased tenfold over the previous year, and we quickly realized that it was an attractive business model. We also couldn’t help but notice that the business was generating robust cash flow – which was important to me, as I have never run a money-losing business.” It was at this point that MP set eCloudvalley’s long-term strategic direction in stone and began focusing the company’s resources on building an MSP business in close cooperation with AWS.

As MP describes it, “We’ve become the leader in this space because the market was quite small in the early days, so potential competitors did not care enough about it. As a result, they didn’t put in the work necessary to understand the market. Having neglected to ‘pay their tuition’, they did not perceive the opportunity, nor did they develop the skills necessary to understand the market and to compete in it. We may not have initially been AWS’ best partner, but we have continuously sought to improve our level of service to our customers and, in the process, evolved to become AWS’ best partner.” Up to today, eCloudvalley has achieved many firsts within the AWS ecosystem. eCloudvalley was the first AWS Premier Consulting Partner in the Greater China Region and is also the largest AWS MSP in Taiwan. Because of its outstanding performance in Taiwan, eCloudvalley was invited by AWS to enter the Hong Kong market in 2016. Not surprisingly, it became the No. 1 AWS MSP in Hong Kong in less than two years. eCloudvalley subsequently expanded its operations in China and began developing its business in Southeast Asia – and it now has the largest AWS MSP service team in Greater China. Last but not least, eCloudvalley was the first amongst its global cloud service provider peers to become a publicly listed company when it listed on the Taiwan Emerging Stock Board in July 2018. With that accomplished, eCloudvalley soon attracted a 16% FINI holding. MP is keeping his eyes focused firmly forward, pointing out, “In the future, we will maintain our first-mover advantage. To dominate the market, we must always hold onto this mindset. This is a winner-take-all market, and our attitude is go big or go home.”

Spinning an enormous spider web so that customers “stick” around

When asked why an enterprise would want/need to hire an MSP to migrate to AWS rather than doing it by themselves, MP replies, “AWS adds a new service every four hours, and most enterprise IT staffs are not willing or able to expend the effort to keep up. They need a reliable MSP to offer them suggestions for how to best use all these new tools. Herein lies our value. Each AWS service is like a LEGO brick, and we help customers select the appropriate bricks among those thousands of bricks to construct their desired final products. If a customer wants to build a car, we help them to build the car that meets all their needs. We provide consultation, implementation and migration services to our customers, as well as offer subsequent management, operation and maintenance services. There is a strong incentive for our customers to stick with us because they genuinely value the service and find us indispensable. Therefore, our MSP revenue is recurring.”

An excellent example of this is eCloudvalley’s collaboration with a Hong Kong-based insurance company. The company aimed to create an automated reimbursement system for flight delays that would eliminate the need for travel insurance policy owners to manually provide the many documents necessary to file a claim. Using AWS’ “LEGO Blocks”, eCloudvalley developed a system architecture that allowed the company to: i) build a program to scan data from airports around the world; ii) determine which flights had been delayed long enough to trigger an insurance payout; and iii) automatically make a payment to the customers who had purchased insurance for that flight.

eCloudvalley has observed two important characteristics of their business over the past several years. First, customer retention rates are high. Second, existing customers tend to expand the scope of their spending on cloud services, often rapidly. In other words, existing customers are a key driver of eCloudvalley’s revenue growth. In MP’s words, “You never know just how big your customer’s budget for cloud services can become. Using a client of ours from the financial industry as an example, the company increased its usage of cloud services by a factor of 50 only one year after their initial migration to the cloud. Using a metaphor to describe this phenomenon, business from our customer is like water, and cloud services are like a pipe with an infinite capability to carry water. Once our client turns on the flow of water, it almost always continues. Not only that, but the volume of that flow increases over time. Since this is the nature of our business, our long-term goals are to be greedy when it comes to increasing the number of our customers, improve customer retention by making our service sticky, and allow those customers to use more and more of our services. I am always telling our staff that if Infrastructure as a Service (IaaS) were to become commoditized five years from now, we’ll need to differentiate ourselves with the services we provide. As a result, our strategy is to reinvest our earnings in building a skilled & talented team, in technology and in expansion into new markets.”

According to MP, the process is much like spinning an enormous and intricate spider web to simultaneously capture new customers and keep them “sticking around” eCloudvalley’s platform, while constantly widening the gap between the scope and robustness of your web and that of your competitors’ webs. As MP says, “For example, ATLAS is our proprietary cloud management platform and was developed very early in our company’s history. We have continued to add functionality and innovate, based on our years of experience and our accumulated know-how. Therefore, we continue to be the ‘first mover’, taking cloud services into areas where others have not even perceived the need nor the opportunity. The level of automation with ATLAS is far beyond that of our peers, and the platform allows our enterprise customers to automatically monitor their machines in datacenters all over the world. We are preparing our customers for the digital transformation of their business while ourselves keeping abreast of and investing in a diverse set of emerging technologies.” MP pauses, smiles and then adds, “Every new competency we develop can grow into a new business. We’ve seen it happen over and over again.”

Asia’s Most Knowledgeable & Experienced AWS Partner

“AWS has seen our continuous investment in technology and talent and has watched our level of expertise grow. They are pleased to have a partner that is so skilled in using their ‘LEGO blocks.’ This benefits eCloudvalley greatly when we enter new markets, as most of our initial customers are recommended by AWS. As a service provider who has been around for just over six years, convincing governments and large enterprises to entrust us with their data migration would otherwise be a big challenge. But the confidence that AWS shows in our capabilities is a strong endorsement, allowing us to win over these large accounts. For example, we just set up an office in Malaysia this year, and AWS has introduced several large enterprise projects that we are gearing up to execute. The same was true when we entered the Philippines and Singapore markets in the past few years. We are continually onboarding and training new talent, just to keep up with demand for our AWS-related services.”

MP pointed out that the total addressable market for Asian MSPs ex-Japan and ex-South Korea is projected to reach more than US$15 billion by 2023, and that AWS-related market share is expected to remain No. 1. He adds, “The market is large enough to accommodate many competitors. Our goal is very clear, to expand our market share within the AWS ecosystem by being the MSP who knows AWS best.” eCloudvalley has won the trust of AWS the old-fashioned way – they’ve earned it. The company has built a deep knowledge base of AWS certifications, successfully executed client projects one by one to burnish its reputation and developed the industry’s most comprehensive automated cloud management platform – all the while expanding its team size and enhancing its technical strength. Says MP, “AWS now passes its large enterprise customers and difficult projects onto us, as they want to ensure that these projects are well-executed so that they don’t to lose these customers. You can see that in the numbers; we have a much higher win rate for project bids than our competitors.

On the other hand, MP believes that the multi-cloud services model is more appropriate for large-scale global system integrators such as Accenture which already own a large customer base and can offer customers recommendations amongst different cloud service platforms. “If we wanted to provide multi-cloud services, we would need to enlarge our service team, and it would be even more difficult to remain profitable.” Therefore, at the current stage, eCloudvalley will maintain its strategy of focusing on AWS, growing together with AWS and gaining market share within the AWS ecosystem. MP adds, “But this does not mean that we will not provide any services for other cloud platforms. We offer our advice regarding other cloud platforms if it is requested by our customers.”

Cloud business still growing at a fast pace this year, despite the challenges brought on by COVID-19

Although the COVID-19 pandemic has created a challenging macro environment, eCloudvalley’s cloud business has maintained its trend of rapid growth year to date. MP commented, “Our hearts go out to all families who have lost loved ones or their livelihoods to COVID-19. We hope for the rapid development of a treatment and vaccine, and for a swift decline in the human toll that this virus is creating. In the first half of 2020, the impact of the pandemic on our cloud business has been negligible. First, more than 95% of our revenue is recurring, and existing customers continue to increase their usage of the cloud. Second, new customers that we pitched in the second half of last year initiated projects with us this year. Now that our client visiting process has returned to normal in each region, I believe our cloud revenue will continue to grow rapidly this year and in coming years.”

MP also indicated, “We have continued to execute our plans to expand to other regions and look to accelerate our expansion in Southeast Asia as soon as possible after the pandemic. We see Southeast Asia as the region with the strongest potential for revenue growth in coming years. Our revenue in the Philippines in 2019 increased tenfold over the previous year, and I believe that indicates we are on the right track there.” Regarding the long-term impact of the COVID-19 pandemic on eCloudvalley’s cloud business, MP says, “The pandemic has caused many enterprises to accelerate migration of their core systems to the cloud, and we are well-prepared to embrace this trend.”

eCloudvalley’s places a strong emphasis on talent cultivation and retention and has a robust internal system for onboarding and training new talent. The company’s strong growth in recent years has had a positive effect on the company’s new employee recruitment efforts. Says MP, “In the beginning, when we were nobody, it was very difficult for us to find the right talent. Today, we have gained a certain reputation in the industry, and talented candidates now frequently approach us to seek opportunities. Additionally, one reason that we are preparing for an IPO is to further enhance our ability to attract more motivated, hard-working young women and men to join our team.” As for the concern about talent poaching, he says with a big smile, “Yes, I think about this threat every day. It is one of my biggest concerns – and that is why I try to treat my employees so well that they will never want to leave! We’d like them to be ‘stuck’ in the Spider Web along with our customers.”

<< Source: Quantum International Corp (QIC) >>

2020-07-02T13:59:33+00:00 2020/07/02 |Insights|