Clarity and agility driving growth for newly-independent unit
Strong portfolio in comms and networking solutions, plus new cloud-based solutions
THE future of Alcatel-Lucent Enterprise (ALUE) and its growth ambitions can be summed up in a single slide, according to a senior executive.
“Yes really; I can share it with you later because it's all there in that one slide,” says the company’s vice-president of sales for Asia, Matthieu Destot (pic above), speaking to Digital News Asia (DNA) in Singapore.
It’s been six months since the company became an independent entity, thanks to Chinese investment firm China Huaxin Post & Telecommunication Economy Development Centre acquiring 85% of the business for US$255.58 million, which was finalised last October.
Destot, who stepped into his role in July 2014, relocating from France to Singapore where he was vice president of Enterprise Sales for France, begins by pointing out the immediate benefits gained from this ‘new beginning’ for the company.
“We are a company with strong assets in terms of our product portfolio for communications and networking solutions, in addition to our new cloud-based solutions.
“We are also a debt-free company with investment capabilities. In the past, all the profits fuelled by our growth went to the parent company where the carrier business was struggling a little bit – this is no longer the case,” he declares.
It is clear that while ALUE now enjoys greater agility and deeper investment capabilities, the playbook for boosting its fortunes in the networking and communications space hinges on a tightly focused approach to capturing market share.
“As a profitable company, the question is of course where will we invest, and where will we grow? We will be investing heavily in our product portfolio, leveraging on our expertise in Unified Communications (UC), networking, and the cloud to further develop new offerings,” says Destot.
Focused R&D, partnerships to expand footprint
The company has its research and development (R&D) operations in France for communications technology and in the United States for networking solutions. ALUE currently invests 16% of its annual revenue back into R&D.
“Our objective is to maintain this investment at 16% while growing our top-line revenue, and with our target to double our revenue over the next five years, this will translate into a boost in absolute value of our investment in R&D,” says Destot.
ALUE is slated to unveil new products in the coming months, such as version 2.1 of OpenTouch (pic above), its UC platform with new terminals for solution delivery. For the networking portion of its business, it will soon be rolling out a new switch – OmniSwitch 6350 – specifically targeted at small and medium businesses (SMBs).
The new switch is intended to beef up its recently enhanced OpenTouch Suite for SMB, a lineup of communications solutions intended to give the tools such businesses need to reap the benefits of enhanced communications, while making those tools simpler and more affordable.
The second key area of investment for ALUE lies in its Go-To-Market strategy, with clearly outlined areas for growth specific to individual markets, and an increase in joint ventures to further market footprints.
Destot highlights the company’s unique positioning in the United States, having gotten approval from the US Government to sell its solutions in the market – an important certification – especially for public sector contracts.
“We’re now in a situation where we are a France-based entity with a Chinese shareholder with approval to do business in the United States, with a huge installed base in Europe where we are No 1 for communications and in the top three for networking.
“That’s unusual as our competitors range from North American companies which are struggling to enter the Chinese market, European vendors with no real market share in the United States or Asia, and Asian competitors such as NEC and Huawei which are trying to enter the American markets,” he adds.
He admits that having a Chinese shareholder would certainly aid in opening doors and opportunities in China, especially when it comes to getting business from public sector entities there.
Russia is also another important market for the company, with a joint venture to be announced there soon.
Beyond China, the blueprint for Asia
Asked about the company’s plans for the region moving forward, Destot offers a very precise and clear outline that speaks to ALUE’s targeted intentions.
“In Asia, we are investing additional resources, with plans to grow the team here by another 25% with a very strong investment and operational plan focused on four key markets: South Korea, India, Australia and Singapore,” he says.
The reason for this targeted approach boils down to market size, with 30% of the Asia Pacific market for such solutions coming from Japan, 20% from China, and of the remaining 50%, more than two-thirds come from the four countries above.
“We target to be in the top three in those markets, with more than 15% market share, and we are actually not too far from achieving this.
“In Korea and Singapore, we have a strong presence in the networking solutions space and a challenger position in UC, while the reverse is true for India and Australia, where we are in the top three for UC and a challenger for networking,” he adds.
In Japan, the company focuses exclusively on networking solutions and has strong partners such as Softbank to help penetrate a market where regulations heavily favour local players.
Tapping into the SMB segment
The Asian SMB segment is an opportunity that Destot is very optimistic about, given how many economies are dominated by the segment in terms of size.
“On top of our four core markets, we are also focusing on Malaysia, Indonesia and the Philippines with regards to the SMB space, as such players are dominant in those markets,” he says.
He notes that with the SMB segment, the No 1 concern is pricing. “It is so price-sensitive that you cannot work the same way you would with large enterprises, where there are two to four rounds of financial negotiations with a sales cycle of six months on average.
“With SMBs, the business owner is the decision maker and what he or she wants to know, right there at the meeting, is: How much? Can you give me added value over the other vendor that has submitted his proposal? Will the solution do what I need it to do?
“… and the contract could be signed right there on the spot,” he adds.
Another point of concern for SMBs is simplicity of deployment, with many companies having no internal IT expertise on hand to manage the transition.
“It has to be the case where the system is deployed in half a day and not two weeks, and it has to work for the next five years with minimal configuration,” says Destot.
“This is where we believe we have a strong differentiator over our competitors, as our SMB solutions are built from the ground-up with such-sized enterprises in mind.
“You can’t tell the business owner ‘Okay, it’s deployed but you have to configure the vLAN (virtual local area network) for data and voice first’ – he wouldn’t have any idea what you’re talking about,” he adds.
Mobility is also another key area for SMBs, with Destot pointing out that some customers have only mobile communications, with no need for fixed-line solutions.
“With our solutions, we simplify and automate the process, such as with our Unified Network Profile, where the customer defines once all the profiles for users, and this is used for any access network – whatever the device,” he adds.
ALUE is very bullish on its ability to service the SMB market, with Destot sharing that the goal is to have 20% of its total revenue across Asia come from SMB customers.
“We cannot avoid being strong in this segment if we want to be serious about Asia, and with SMBs you need to be very local in your approach – this is not a market you can capture remotely from Singapore.
“What we were missing before to do this properly were the resources, such as a sales team dedicated to these markets to engage with interested SMBs, and this is what we’re focused on building up now with our channel partner ecosystem investments,” he adds.
Another reason for this high level of optimism? ALUE is already on track to hit that 20% goal, with Destot sharing that 15% of its revenue already comes from SMBs.
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