Approaches to Business Transformation


  1. Avatar James 03/12/2009 @ 1:09 pm

    Does Alcatel-Lucent’s perspective on managed services growth projections align with what we have seen from Kris?

    • Avatar Andreas Herzog 03/12/2009 @ 1:12 pm

      In general yes. While the exact growth numbers may vary from view to view the germaine point is that the market is growing at a high rate (18% – 22%) and offers one of the fastest growth areas in the services business.

  2. Avatar michele 03/12/2009 @ 1:19 pm

    Do you think there is a market for Hosting Telecom Applications like Messaging, Charging and Billing? If yes where do you think asset ownership should sit?
    Michele Salemi

    • Avatar Andreas Herzog 03/12/2009 @ 1:28 pm

      Yes I do, in fact we do have a hosting business within Alcatel-Lucent. The scope of the platforms hosted will grow and change as telecom operators drive to not only lower operational costs but add applications that can help them grow their revenue. Key to our model is that operators will have options to either own the specific assets, enter into a hosting arrangement, or other models that enable them to lower Capex investments. Each carrier may have different strengths and assets they want to leverage. The key point is in Alcatel-Lucent we will offer multiple and flexible business models to help the Carrier succed in their business model.

      • Avatar Baiju Shah 03/12/2009 @ 1:45 pm

        Not very convinced how each player is going to generate a margin out. I can see how the service providers saves money but the outsource provider/partner will struggle on the margins in the emerging markets. How is this handled or there are different regional based service levels offered?

        • Avatar Andreas Herzog 03/12/2009 @ 1:56 pm

          Yes there are different models and service arranagements in the different regions. But key in our message is that Manged Services is moving away from just being a cost saving decision. It is migrating to both cost savings and assisting Telcom Operators in meeting their overall business objectives and growing their revenue. To be clear cost reducion is still important but the larger scope of business transformation requires working with a true partner. The partner shares both the risks and rewards of the success of the Telcom Operator business plan. In this partnership both parties (vendor and operator) are driven by the same success factors. Therefore margins issues are adressed.

          • Avatar Ragnar Jensen 03/12/2009 @ 2:14 pm

            Thanks. I understand your view of tighter partnerships, but could you please be more precise on the POTS issue:

            In your view, could outsourcing help operators to prolong life expextancy of Alcatel-Lucent RSUs and S12?

          • Avatar Andreas Herzog 03/12/2009 @ 2:47 pm

            Yes we do and to be specfic there are a couple of areas that we view are drivers in this space. Key in this area is the aging workforce and the ability to find these legacy skills. We can help ensure that the skills needed are available. Second these networks become more expensive to maintain therefore putting greater margin pressures on the services. Our Managed Services contract and Multi-Vendor expertise can help lengthen the life cycle and improve both the cost structure and performance of these networks. We see this as a key advantage that ALU brings to the market. And one the growth areas for our business.

  3. Avatar Baiju Shah 03/12/2009 @ 1:40 pm

    How well are Alcatel – Lucent placed to grow the various areas of their business as there has been large number of skilled resources leaving ALU.

    • Avatar Andreas Herzog 03/12/2009 @ 2:24 pm

      We are confident that Alcatel-Lucent has the most skilled workforce in the industry, and while we are going through some reductions in particular areas of our business, we are growing and hiring in Managed
      Services and other key areas of our business.

  4. Avatar Ragnar Jensen 03/12/2009 @ 1:46 pm

    I agree with your view of what operators need to address going forward.
    However, I miss one aspect: How can Managed Services companies help operators with their legacy.

    More specifically: How can Alcatel-Lucent help operators to
    • extend the lifetime of PSTN and ISDN well beyond 2020 to avoid unecessary migration of unwilling customers to more modern service platforms. Eg, not migrating senior citizens to new solutions that not add any value to them.
    • shift production cost base to more variable cost base (more aligned with decline in POTS subscriptions)


    • Avatar Andreas Herzog 03/12/2009 @ 2:02 pm

      We view this area as one of the most promising in Managed Services. In fact Alcatel-Lucent is the market leader in manged services contracts in the legacy wireline space. We work with operators today to both mantain these revenue rich networks and help migrate some of their customers to the new technologies but also maintain the exisiting infrastructrue. We have contracts in both NAR and Europe that provide this service. And our flexible business models can help make favorable cost models for our customers.

  5. Avatar Jean-François Bardet 03/12/2009 @ 1:48 pm

    I am a Telecom Enterprise Architect / Manager and know very well the environment of the so-called ‘Next Generation Billing”.

    In your presentation you spoke about carriers, service providers, Capex and Opex etc… but never you dealt with what is the main feature of telecom today : fraud & revenue leakages. It indeed represents according to main analysts 10 to 12% of all telecom revenue. This could be partly solved thanks to the next generation billing. Could you tell me your thoughts about this?
    Best regards,
    Jean-François Bardet

    • Avatar Andreas Herzog 03/12/2009 @ 2:38 pm

      Agree that this is a key area of concern with Telecom operators. We beleive the entire OSS/BSS environment has ample room for improvement in both Simplification as well as quality improvement. We definitely have OSS/BSS solutions in our plans, as this will be a critical part of an overall business transformation plan that Telecom operators must address.

  6. Avatar Vibhor 03/12/2009 @ 1:49 pm


    What challenges do you face in positioning managed services to operators and how do you over come those?

    How do you show tangible business benefits to the operators & their fear of job loss? its like unless you eat, you don’t know the taste. How do you over come these?



    • Avatar Andreas Herzog 03/12/2009 @ 2:11 pm

      The key to success is building a realtionship with our customers that is both at the executive level and is focused on the overall benefits of a Managed Services partnership. Within the Telcom operator there are of course people who feel threatened but we gain the support from the executive levels. Secondly we stress that our rentention rate of transfered employees is very high and we offer very exciting job opportunites within ALU which we share with the working levels. This combined approach helps to overcome the fear aspect of a Managed Service arrangement.

  7. Avatar Tim Joyce 03/12/2009 @ 2:39 pm

    What functions of the Telecom Operator’s business are so fundemental that it would be detremental to their strategic objectives to seek to outsource them?

    • Avatar Andreas Herzog 03/12/2009 @ 2:58 pm

      The simple answer is that “operational functions” such as design engineering operations depolyment are the stong candidates for outsourcing. Those that are “planning fuctions” are generally kept in house. That said what is important in this new environment is that even the fuctions that are not directly outsourced, but maintained “in- house”, in a partnership the benefits of the vendor are still leveraged. So there will be a number of fuctions that our outsourced (primarily operations based) some that are more collaborative and more belnded than purely outsourced (planning) and some that are maintained intenally.

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