Transformation: Key Element of Alcatel-Lucent’s Strategy for the Communications Market

I have just returned from an Analyst Event hosted by Alcatel-Lucent’s (ALU) Application Software Group – now comprising its enterprise applications development and sales team and the Genesys portfolio and organization. Besides being a highly entertaining event at a fabulous locale (Rosewood Sand Hill Hotel in Menlo Park), this gathering also provided analysts with a good perspective on ALU’s strategy for the UC and contact center spaces. ALU demonstrated its determination and ability to continue to lead in the communications markets with innovation, openness and strong financials.

The following are some of the takeaways from the event.

Transformation: For some time now, ALU has been sharing its vision for a necessary transformation in the enterprise, involving various technology and organizational changes. One of the aspects of this transformation process is the merger of enterprise and contact center technologies and business processes. With the merger of its enterprise and contact center teams into the ASG structure ALU is setting itself up for more targeted transformational product development and marketing. This organizational structure is unique (to my knowledge) and could enable ALU to more effectively develop and promote innovative capabilities creating new opportunities and expanding its addressable market.

For a long time, ALU has sought to leverage Genesys’ contact center success into the more general enterprise space, but has not been able to implement a powerful and coherent strategy to complement its vision. With the merger of the two teams and the prospects of cross-selling and up-selling customers across the enterprise and contact center markets, ALU may be on a path to finally bring its vision to fruition. Moreover, it may be able to set a trend in the communications market that will drive a transformation of vendor organizations leading to an accelerated convergence of enterprise and contact center infrastructures and decision making processes among customer organizations.

Some of the specific objectives pursued through its Transformation strategy include:

• Delivering expanded solution offerings
• Presenting one face to the customer
• Leveraging a wider choice of models

Some of the specific steps in the merging of the two silos involve the extension of presence and UC into the contact center and the ability for customer service interactions to extend into the enterprise pool of experts. This notion is not entirely unique to ALU, but all vendors are at the initial stages of developing the technologies and strategies to implement this vision. If ALU is successful in leveraging its new organizational structure to more efficiently market these new capabilities, it may be able to develop a sustainable competitive advantage as “the walls of the contact center start coming down” (as prophesied by ALU’s executives).

Application Enablement: Another message that ALU has consistently tried to convey to its customers and partners over the past couple of years is that of its application enablement efforts and capabilities. Application enablement has become a key element in communications vendor strategies as they look to integrate with other vendors’ applications in order to deliver greater value to their end users. 

I need to take a step back before I discuss ALU’s application enablement strategy further. One of ALU’s perceived competitive advantages is the combination of carrier and enterprise product and service organizations. Since FMC has demonstrated little success to date and these continue to be two very distinct silos, I have wondered whether there were any true synergies between the two groups within ALU. As ALU revealed its vision for application enablement, it started to become more apparent about how the carrier and enterprise/contact center groups could leverage each other’s capabilities for greater success.

Here is how ALU defined its vision for application enablement bringing the carrier and enterprise application worlds together: “Consistent, Controlled, Open Access to Network Enablers in the Cloud”. For example, ALU’s idea of application enablement involves the integration of carrier applications with enterprise/contact center ones to enable capabilities such as enhanced caller profile (with presence, location, preferences from subscriber data, etc.) that can prompt an appropriate action by the respective business or organization – e.g. marketing and customer assistance at the right time and place. It also brings the mobile and enterprise experiences together by enabling mobile users to collaborate using multi-media capabilities on mobile devices. Overall, application enablement allows business users to participate in contextually rich, presence- and location-enhanced communications and collaboration.

ALU is working with partners to develop new applications and capabilities. It claims over 200 applications and about 10,000 developers in its Alliance and Application Partner Program.

Further, ALU’s vision for the convergence of the carrier and enterprise worlds is based on the anticipated growth in demand for hosted/cloud-based communications. It is readying its portfolio and service resources for a variety of scenarios – from fully premises-based to hybrid to fully hosted ones.

Main Technological and Strategic Tenets and Success Factors

ALU is looking to leverage a set of capabilities that can set it apart from other communications vendors. What end users and partners should take into consideration when evaluating ALU as a potential vendor or partner, include the following:

• It boasts some of the most open technologies in the marketplace, both on the enterprise and Genesys sides. It can deliver advanced communications and collaboration capabilities in a multi-vendor telephony environment. It is set on a technological evolution path leading to increasingly more open, software-centric solutions based on SIP. These capabilities make ALU a viable option for existing Nortel customers wishing to avoid a drastic rip-and-replace scenario, but looking to overlay some advanced capabilities on top of existing platforms or to prepare themselves for a transition to a new infrastructure in the future. Further, the openness and modularity of ALU’s technologies counter-position it against Cisco and its over-arching strategy of locking customers into an end-to-end Cisco architecture.

• In the UC market, Alcatel-Lucent (ALU) has positioned itself for competition both as a one-stop shop for a broad range of UC applications and a voice communication partner to the IM/presence vendors such as Microsoft and IBM. It provides the My Instant Communicator (MyIC) application (supported on its My Teamwork multimedia platform) that integrates telephony and online presence and can perform multiple functions. It can act as an IM client and a softphone interface to ALU’s voice communication and conferencing platforms; it can also invoke other IM clients such as IBM’s Sametime or Microsoft’s Office Communicator. ALU’s UC solution is modular and flexible allowing customers to deploy only the capabilities and respective servers (telephony, presence, conferencing, etc.) that they require with the ability to add applications and integrate them into the UC environment in the future. This architecture makes ALU a viable option for businesses with multi-vendor communication environments looking to deploy advanced conferencing and UC capabilities without replacing existing call control platforms. 
• Further, ALU’s application enablement strategy and respective capabilities are likely to provide it with a competitive edge going forward as businesses look to integrate UC with mobile applications, contact center technologies, business processes and various Web 2.0 applications. Business decision makers will need to start evaluating communication technologies as a strategic investment in improving business processes and will, therefore, need to require their vendors to demonstrate an ability to integrate with other, existing or planned platforms and applications. ALU’s application enablement capabilities should be taken into consideration when selecting a communications vendor.
•  With its carrier technologies and existing relationships, ALU is well positioned to drive carrier and enterprise convergence delivering similar or coherent applications across the two silos. In some scenarios, businesses may be able to derive significant benefits from hybrid cloud and premises-based communications infrastructure solutions. ALU will be well positioned to deliver both capabilities in a tightly integrated fashion.
• ALU executives stated that they intend to create new market opportunities and expand ALU’s addressable market. I believe they have a powerful vision and their success will depend entirely on their ability to execute. For that purpose, organizational structure and business practices related to the convergence of enterprise and contact center, carrier and enterprise groups, will need to be tightened. Greater focus on solution selling and customized transformational engagements with business customers will be key to success. Last, but not least, financial performance will need to improve in order to provide the company with greater resources to fulfill its vision.