Nokia Solutions and Services after Nokia

As many market observers had expected for sometime, Nokia closed the chapter on what can only be described as a dramatic climb-down for what once was the world’s leading mobile player. Nokia agreed to sell its Devices & Services business to Microsoft for 5.4 billion euros. What does this mean for Nokia Solutions and Services (NSN), formerly Nokia Siemens Networks? I have several observations:

  • I expect that more change for both Nokia and NSN lies ahead. Nobody can accuse Nokia of shying away from fundamental transformations: from pulp producer, to electronic component supplier, to mobile phone company, to now what resembles a holding company looking after a network infrastructure business (NSN), a cloud-based mapping service (HERE), and a patents and a licensing operation (Advanced Technologies). I see no synergies between these operations. Hence, a breakup of Nokia followed by an initial public offering of NSN could be one possibility. At the Mobile World Congress 2013, NSN presented itself in a manner what - to me - looked like dressing up for an IPO: a lean and mean provider of mobile broadband network solutions.
Read more

It's Harvest Time For Vodafone In The US

Alas: It has finally happened. Vodafone has sold its 45% stake in Verizon Wireless to Verizon for $130 billion in a part cash ($58.9 billion) and part equity deal. The deal values the 45% stake at 9.4 times EBITDA. Markets had been speculating about this deal for years, so why has it taken place now? Arguably, the decision was made easier by Verizon’s share price, which is at a decade high, as well the the potential for rising interest rates. From Vodafone’s perspective, our main observations are that:

  • The deal is strategic for Vodafone and financial for Verizon. While the deal is a strategic transaction for Vodafone – it has decided to exit the US market – it is a financial transaction for Verizon: It already controlled Verizon Wireless through its 55% stake in the business. But after Vodafone’s exit, Verizon can keep the cash and no longer needs to pay out a dividend to Vodafone. It can instead use this retained dividend cash flow for capital expenditures and other investments to help boost its position in an increasingly competitive US wireless market (e.g., Softbank + Sprint; T-Mobile + MetroPCS).
Read more

The Expectation Gap Increases Between Business And IT Leaders

Business Technology (BT) is a means to an end. BT is there to support the business objectives. Similarly, the task of IT leaders is to provide the most appropriate technological infrastructure to all employees so that they can pursue the business objectives most effectively. In other words: IT and business leaders should have the same perspective.

Yet, new Forrester survey data indicates several gaps in opinion about network infrastructure aspects between business and IT leaders. We see a risk that IT will purchase network and collaboration assets that do not address the demand by business lines. Similarly, there is a risk that business lines remain unaware of network and collaboration assets that IT has put in place. Under both scenarios, businesses waste valuable resources and end up with an inefficient network and collaboration infrastructure.

Our new report The Expectation Gap Increases Between Business And IT Leaders helps sourcing vendor management professional define an IT and networking strategy that supports overall business goals. This report is a follow-up of our 2012 report, Prepare For The Connected Enterprise Now. Our main messages to business based on the survey results are to:

  • Drive communication infrastructure projects in collaboration with business and IT. Eight out of 10 IT and business leaders consider network and telecom technologies critical to driving staff productivity. Sourcing professionals should focus activities on driving the road map and jointly develop business cases.
Read more

Telefonica Deutschland grabs top spot by buying E-Plus - but the real challenges remain the same

KPN has agreed to sell E-Plus to Telefónica Deutschland for an implied valuation of €8.1 billion. The transaction will combine the No. 3 and No. 4 carriers in the German mobile market to create the new No. 1 carrier based on a subscriber market share of 37% and 43 million subscribers  (although only a No. 3 based on a 32% revenue market share).

While the deal brings a variety of opportunities, Telefónica will still face an assortment of challenges:

  • Telefónica believes that the deal will unlock synergies of an estimated €5.0 billion to €5.5 billion. About 70% of these synergies will come from opex savings and 30% from capex savings. In addition to processes rationalisation and reduced SG&A expenses, financial, and tax synergies, a stronger competitive position from increased scale, site consolidation, and rationalisation will play a major role. Telefónica is planning to reduce around 14,000 sites. In total, about half of all opex synergies come from network-related savings. This form of network consolidation will be bad news for network infrastructure vendors like Nokia, Ericsson, and Huawei as consolidation hits the largest European market for network infrastructure.
Read more

Orange Business Services Analyst Event 2013: The Cobbler Sticks To His Last

with Brownlee Thomas, Ph.D., Henning Dransfeld, Ph.D., Bryan Wang, Clement Teo, Fred Giron, Michele Pelino, Ed Ferrara, Chris Sherman, Jennifer Belissent, Ph.D.

Orange Business Services (Orange) recently hosted its annual analyst event in Paris. Our main observations are:

  • Orange accelerates programmes to get through tough market conditions. Orange’s’ vision in 2013 is essentially the same as the one communicated last year. However, new CEO Thierry Bonhomme is accelerating cost saving and cloud initiatives in light of tough global market conditions. The core portfolio was presented as connectivity, cloud services, communication-enable applications, as well as new workspace (i.e., mobile management and communication apps).
  • Orange proves its capability in network-based services and business continuity. Key assets are its global IP network and its network-based communications services capabilities. In this space, Orange remains a global leader. These assets form the basis for Orange taking on the role of orchestrator for network and comms services, capabilities that have (literally) weathered the storm, proving its strength in business continuity.
Read more

Embedded connectivity adds new spin to Colt's IT offering

Dan Bieler, John Rakowski

Recently we attended a Colt Technology Services analyst day in London. It was great to see a technology services provider who is trying to embrace both disruptive ICT trends and challenges facing enterprise IT. Here is a high level summary of our views from the event:

Dan: Colt views its network assets not as its key differentiators - but its IT services. Although IT services today account for only a small fraction of Colt revenues, Colt views its network infrastructure assets as a means to an end to support IT services. Whilst we agree that network infrastructure runs the risk of commoditisation, Colt’s network helps to differentiate Colt’s offering from both IT service providers without network infrastructure and carriers with a less impressive network footprint. Quality network infrastructure is the basis for developing reliable, secure, and compliant ICT solutions. Maybe Colt ought to view itself more as a communications integrator than an IT Services provider.

John: Colt’s provides a strong European IaaS offering. One of the presentations focussed on Colt’s European datacenter footprint. At Forrester we get many inquiries on hosting and IaaS-specific options for Europe as many clients have to address regulatory and business requirements for data to reside in specific countries. Colt has a substantial number of data centers in European countries including the UK, France, Germany, Spain, Italy, and Switzerland.

Read more

T-Systems Analyst Summit 2013: Positive Momentum With Interesting Pitch Of New B2B2C Positioning

Henning Dransfeld, Ph.D., Clement Teo, and Brownlee Thomas, Ph.D.

We recently attended T-Systems' Analyst And Sourcing Advisor Summit in London. T-Systems has made some progress since its last analyst summit, not least of which is the development of a clearer overall market message and further developments of its portfolio. Its overall market message centers on what Forrester calls “the age of the customer.” The vendor emphasizes enhanced network/solution performance, innovation, and execution. Our key takeaways were:

  • The deepening the relationship between T-Systems and parent Deutsche Telekom is sensible.  During the keynote, and in the breakout sessions, there were several references to how T-Systems’ assets complement Deutsche Telekom’s. T-Systems is moving ever closer to its parent Deutsche Telekom, in particularly in the B2B2C space. T-Systems can provide solutions to its business customers that are brought to market through Deutsche Telekom's consumer customer base. Such an approach is limited to Deutsche Telekom's footprint. However, this strategy could also be extended to other carriers as white-label solutions, where no competitive conditions exist (e.g., in Spain or the Nordics). This approach clearly makes sense for both Deutsche Telekom and T-Systems and is reflected in T-Systems "zero-distance" marketing message.
Read more

Amdocs Gains Momentum As A Leading Customer Experience Provider

Dan Bieler, Katyayan Gupta, Clement Teo

We recently attended Amdocs' customer event in Singapore. Amdocs is gradually adjusting its strategy to reflect one of the most fundamental changes in the ICT industry today: Increasingly, business line managers, think the marketing or sales officer, are the ones influencing sourcing decisions. Traditional decision-makers, CTOs and CIOs, are no longer the sole ICT decision-makers. Amdocs is addressing this shift by:

  • Strengthening its customer experience portfolio.Successful telcos will try to regain lost relevance through improved customer experience. Marketing, portfolio product development, and sales are therefore growing in importance for telcos. Amdocs’ integrated customer experience offering, CES 9, provides telcos with a multichannel experience; proactive care; and self-service tools.
  • Betting big on big data/analytics.Amdocs is leveraging big data/analytics to provide real-time, predictive, and prescriptive insights to telcos about their customers’ behaviour. Communications-industry-specific converged charging and billing solutions as well as other catalogue solutions give Amdocs the opportunity to provide more value to telcos than some of the other players.
Read more

Google enterprise roadshow 2013: shooting for the moon

I attended Google’s annual atmosphere road show recently, an event aimed at presenting solutions for business customers. The main points I took away were:

  • Google’s “mosaic” approach to portfolio development offers tremendous potential. Google has comprehensive offerings covering communications and collaboration solutions (Gmail, Google Plus), contextualized services (Maps, Compute Engine), application development (App Engine), discovery and archiving (Search, Vault), and access tools to information and entertainment (Nexus range, Chromebook/Chromebox).
  • Google’s approach to innovation sets an industry benchmark. Google is going for 10x innovation, rather than the typical industry approach of pursuing 10% incremental improvements. Compared with its peers, this “moonshot” approach is unorthodox. However, moonshot innovation constitutes a cornerstone of Google’s competitive advantage. It requires Google’s team to think outside established norms. One part of its innovation drive encourages staff to spend 20% of their work time outside their day-to-day tasks. Google is a rare species of company in that it does not see failure if experiments don’t work out. Google cuts the losses, looks at the lessons learned — and employees move on to new projects.
Read more

Social Media Collaboration In The Enterprise Environment Is Key For Business Communications

Source: BBC / Paul Butler

Social media platforms like Facebook and Google+ are fast becoming a big topic for business. Consumers are embracing these communication and collaboration channels for more than just sharing holiday memories. According to software provider Invesp, one-third of workers use social media at work for at least an hour a day. Most of us also expect to use these collaboration channels increasingly in our work environments to improve the information flow.

We want to communicate at work as we are used to communicating when off work – with or without the consent of our employers. Today, however, Invesp data shows that less than 20% of companies have integrated social media with their customer care, sales or product development. Moreover, communication culture is part of business culture and work flexibility and as such impacts any business’ endeavor to attract and retain creative talent. Data by office solutions vendor Intelligent Office, indicates that 25% of people say they would not work for a company that does not allow social media at work.

For IT and business leaders, these social dynamics bring their own opportunities and challenges, as social media communication:

  • Provides an innovative and attractively priced communication infrastructure.Top management and business line managers alike increasingly recognize that social media forms a fundamental channel for informal communications. Social media offers cost effective collaboration and communication channels.
Read more