A Dropped Call: AT&T And Deutsche Telekom Put US Merger Plan To Rest

Dan Bieler

It does not come as a real surprise that the deal aimed at merging AT&T's and Deutsche Telekom's US wireless operations got nowhere. We were expecting as much back in autumn. In our view, there are no winners as a result of this dropped deal, not even the US consumer. The US consumer can look forward to poorer network infrastructure and a weakened T-Mobile as the low-end market provider. Hence, the Federal Communications Commission and Justice Department attained somewhat of a Pyrrhic victory.

Whilst the collapsed deal is a major irritant for AT&T, it is a disaster for Deutsche Telekom, as it leaves T-Mobile US in a very difficult position. With about 10% of the US wireless subscribers, T-Mobile US remains subscale. Its image is increasingly trending toward cheap rather than good value, given its patchy network coverage, especially in rural areas.

The reluctance by Deutsche Telekom to prepare for a "no-deal scenario" leaves T-Mobile without a clear strategy. This lack of direction is very risky and only pushes T-Mobile further down a slippery slope toward increasing churn and revenue and margin challenges. Deutsche Telekom needs to communicate its plans for 4G roll-out, spectrum purchases, partnerships for network sharing, and device portfolio. Above all, Deutsche Telekom needs to decide soon whether to pursue an IPO, a sale to another operator or a financial investor, or target a merger with the likes of Dish, Leap, Clearwire, Sprint, or even LightSquared. Ultimately, we expect Deutsche Telekom to opt for a merger scenario.

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Nokia Siemens Networks Outlines More Details Of Strategy At Analyst Event

Dan Bieler

At its 2011 Analyst Event in Boston, Nokia Siemens Networks (NSN) outlined more details of its recently announced strategy review. In our view, the new focus NSN is taking is right. NSN is focusing on growth segments of the infrastructure market and will generate large savings from operating expenses and production overheads. In addition to its focus on providing the most efficient mobile broadband network infrastructure, NSN also highlighted the importance of customer experience management (CEM) as an integral part of its strategy.

NSN also provided more guidance on which market segments it no longer considers core. These include wireline, microwave, Wimax, perfect voice, and business support systems. Some of these, microwave and Wimax, it already spun off. NSN estimates that the overall revenue impact of its non-core disposals will total 10% of its current revenue base. The impact on profit will be less than 10%, as these non-core disposals are low-margin operations.

NSN believes that telcos increasingly demand end-to-end solutions from their equipment vendor partners. No equipment vendors can credibly deliver such end-to-end solutions on their own. Hence, NSN is positioning itself as an ecosystems manager for end-to-end solutions. As part of its innovation drive, NSN increasingly focuses on devising concepts for solutions rather than simply focusing on product upgrades. For instance, Liquid Net is a concept for network infrastructure design that supports a more efficient usage of underutilized infrastructure capacity based on a range of NSN products. Similarly, NSN places great emphasis on its CEM solution, which helps telcos to transform their services offerings by enhancing network-related features that affect customer experience and satisfaction.

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IBM's Acquisition Of Emptoris Moves It Squarely Into The ePurchasing Software Market — Watch Out For Fireworks

Andrew Bartels

IBM today announced that it will acquire Emptoris, a leading vendor of ePurchasing software products, with strengths in eSourcing, spend analysis, contract lifecycle management, services procurement, and supplier risk and performance management (see December 15, 2011, “IBM Acquisition of Emptoris Bolsters Smarter Commerce Initiative, Helps Reduce Procurement Costs and Risks”). That IBM made an acquisition of this kind was not a surprise to me, given that the heads of IBM's Smarter Commerce software team at the IBM Software Analyst Connect 2011 event on November 30 had laid out a vision of providing solutions for the buying activities of commerce as well as the sales, marketing, and services activities. Indeed, in the breakout session in which Craig Hayman, general manager of industry solutions at IBM, laid out the Smarter Commerce software strategy and showed the vendors that IBM had acquired in the sales, marketing, and services arenas, he said in response to my comment about the obvious gaps that IBM had in the buying area that we should expect to see IBM acquisitions in that area.

What was a surprise to me was that IBM acquired Emptoris. My prediction would have been that IBM would buy Ariba, because of the long relationship that has existed between these companies. In contrast, Emptoris has generally worked more with Accenture, and not as much with IBM.

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Kofax Buys Singularity: Investing In The Growing BPM And Dynamic Case Management Markets

Craig Le Clair

Kofax is the latest investor in the BPM business (and for Kofax, this means capture-driven BPM). What Kofax has envisioned for more than a year is now reality. The first step will no doubt be to link the Singularity BPM platform with the capture process and lift data that is then filtered and cleansed and move it to straight-through processes. This provides a lighter-weight approach; for some processes, this will bypass the packaged application or ECM platform. Yet more automation leads to more challenging exceptions — and the more we move to STP, the more those exceptions require case management handling and even more serious human intervention. That’s where Singularity’s case management platform will help; Singularity was a Leader in the 2011 Forrester Wave™ for dynamic case management solutions. Overall, there is a lot to like here. Rather then partnering for BPM, building from within, or trying to leverage 170 systems more fit to purpose workflow, this investment shows that Kofax understands that the real customer value is in process transformation rather than in supporting tasks like capture or document management. More tactically, Singularity fits well with existing Kofax SharePoint solutions. But the real synergy is around distribution: Singularity, as a private company based in Ireland with $15 million in annual revenues, suffered from poor recognition in the bigger markets. Now the 700-plus Kofax partners around the world could change that, and quickly, although not all of the partners may be up to the task. Kofax’s recent investment in MobiFlex, which has mobile technology for capturing PDFs and rich media, can also be tied to capture and now case management apps. Overall, there are many positives to this, and I don’t see a lot of conflict with the recent

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What's On The Horizon Of IBM's 'Smarter Planet'

Chris Mines

I spent some of this week at IBM's annual Connect analyst event, a cornerstone for understanding Big Blue's direction from the perspective of its fastest-growing and most profitable division.

And the direction is pretty clear: behind-the-scenes product integration is enabling tighter marketing and sales integration across what have been separate brands (Lotus, Tivoli, Cognos, etc.) in the software portfolio. Now the emphasis is on capabilities, and on tuning or packaging those capabilities into industry-oriented bundles such as "social business" or "smarter commerce."

IBM's Smarter Planet initiative is starting to have a positive impact in its software business. For the first couple of years since launch, Smarter Planet was principally a door-opener for IBM's business consulting teams, creating interest among clients in how IBM could help assess and improve business performance.

As those engagements have progressed and multiplied, the consulting organization has created "patterns" across them, problems that they run into repeatedly in a particular industry or geography. Those patterns are now being put into code for industry-specific solutions, for APIs that other software vendors can hook into, and other software artifacts. So Smarter Planet is starting to drive opportunity and revenue for the software group as well as consulting services.

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SAP Plans To Acquire SuccessFactors: A Major Move In The Talent Management Field

Claire Schooley

ERP vendors are showing strong interest in the HRM SaaS market. They are either attempting to build a solution (as Oracle is doing with Fusion) or looking to acquire HRM functionality (as SAP is about to do with SuccessFactors). Talent applications — including offerings like performance, succession, and learning — are not easy to build. The niche players have been laser-focused for years on building these solutions or integrating acquisitions, and generally they have done a good job. Now we see other vendors that want this functionality buying up these niche players to offer a complete end-to-end HRM solution. The HRM market is hot! My colleague Paul Hamerman and I have authored research that shows performance growing faster — at 16.5% — than any other HRM segment (HRM Solutions: Traditional Models Clash With Next Generation Processes And Technology). Executives know that having highly skilled employees who know the business and can execute well on strategy is critical to business growth.

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Nokia Siemens Networks Announces Radical Strategy Review

Dan Bieler

Nokia Seimens Networks’ top management has finally pulled the emergency brakes, after months of unsuccessful attempts to find a buyer. Going forward, NSN will focus on mobile network infrastructure and the services market. All other areas are non-core and subject to disposal. We estimate that about two-thirds of NSN’s current portfolio will remain in this new focus area. NSN will retain an attractive product and services portfolio and innovative solutions, as for instance its Liquid Net offering. However, some elements, like convergence offerings, will be difficult to pursue credibly in the future.

In our view, the new focus NSN is taking is right:

  • NSN is focusing on growth segments of the infrastructure market. NSN aims to provide the most efficient mobile networks (including network outsourcing and sharing) to extract maximum value for telcos’ operations by developing intelligent network solutions and boost customer experience management.
  • NSN will generate large savings from operating expenses and production overheads. NSN targets savings of €1 billion annually by the end of 2013. NSN tries to achieve this goal be focusing on organizational streamlining, real estate, information technology, product and service procurement costs, G&A, and supplier consolidation. Despite good revenue growth in recent quarters, NSN’s revenues per employee remain well below that of Ericsson’s in 2010 and even lags Huawei’s. NSN’s plans to reduce its global workforce by 17,000, or 23%, will go some way to address this imbalance.
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Sound The Alarm For Tech Vendors: The European Titanic Has Already Hit The Iceberg

Andrew Bartels

Neither The Economist magazine nor the Organization for Economic Cooperation and Development (OECD) is known for being alarmist. So one pays attention when The Economist in the lead item ("Is this really the end?"; see also "The euro: Beware of falling masonry") in its November 26 issue stated: "The chances of the euro zone being smashed apart have risen alarmingly, thanks to financial panic, a rapidly weakening economic outlook and pigheaded brinkmanship." The OECD had similar strong words of concern in its press release ("OECD calls for urgent action to boost ailing global economy") announcing its latest "Economic Outlook": "Decisive policies must be urgently put in place to stop the euro area sovereign debt crisis from spreading and to put weakening global activity back on track."

For me, the economies of the European Union (EU) have disturbing similarities to the ocean liner RMS Titanic as it steamed across the Atlantic on that fateful trip in 1912. From the start when Greek debt crisis surfaced in early 2010, the leaders of the EU have consistently done too little, too late to keep the problem contained and manageable. The steps that could have been taken to change course were not taken. Instead, the EU ocean liner stayed on its course, right into the path of an iceberg of financial panic.

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How To Get Beyond Alignment

Nigel Fenwick
 

It’s the perennial issue for many CIOs and often the No. 1 challenge for new CIOs: “How do I align IT with the business?” And while this is perhaps the most important challenge for IT groups struggling with a bad reputation across the business, it’s certainly not the most important challenge for IT groups with a solid track record of success. For these teams, the challenge is how to move beyond alignment.

In the report Beyond Alignment: BT Strategic Planning, I highlight how critical it is for IT to help formulate business strategy. The research suggests that how a firm develops and manages business strategy is pivotal to the question of how IT can move beyond alignment. Unfortunately, there are a number of challenges with this:

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Some Thoughts On Digital Strategy And The Four Technologies Driving It

Ted Schadler

I've been hearing a lot about digital strategy and digital transformation lately. (Is that what they call a tech meme?) To my ears, it sounds like a good way to get technology people and business people together to answer four important technology questions: 

1. How do I serve customers and employees on the mobile device of their choice? This one becomes even more important as smartphone and tablet adoption soars. In the US, we at Forrester expect based on our surveys that over a third of smartphones are and will be used for work and over half of tablets will be, too. Consumerization rules this roost.

What it means: Mobile devices are yet another digital touchpoint for marketing, sales, service, and product teams to master. But of course multi-touchpoint means that things must work well on all digital devices and channels: mobile, Web, social, and video.

2. How do I harness social technology for the good of customers and business productivity? IBM and Salesforce.com are betting big that social business will drive technology investment. And of course it will, though not without a fair amount of soul searching into the real sources of value on the part of business and technology people.

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