Recently in Business aspects Category

You might have seen John Roese's blog, in which he, as Nortel CTO, talked to the transformation of R&D in Nortel.

Most visibly, the R&D program has shifted to what we call "20-60-20"- 20% is late-lifecycle spend, 60% is focused on growth and mature product activity, and a full 20% is directed to emerging and new technologies and markets, such as those in application software. An excellent example of the latter is the Nortel Agile Communication Environment, communications integration software.

Some are asking, whether this transformation is still on track given that John is leaving Nortel at the end of the year and given the state of the world economy.

The answer is absolutely yes.

Last week, Phil Edholm, the enterprise CTO, held his first team meeting to drive forward with the enterprise portions of the advanced research and incubation programs, which John initiated.

The incubation program continues to represent some 3% of R&D, and is targeted at opening new addressable markets outside of the existing business units. A good example of an element of our incubation program is web.alive, a highly innovative e-commerce, e-learning and collaboration application.

I am glad to see that R&D continues to be at the heart of innovation in Nortel.

The moderator/consultant of a recent user/vendor roundtable I attended, asked an interesting question: "What would vendors like customers do to differently?"

On thinking about it, I think that what we want to see less feature-driven RFPs, because
1) Feature lists reflect what can be done rather than what the enterprise needs or is using.
2) Feature lists tend to be backward rather than forward looking, and get in the way of identifying new ways of achieving the same or better results.
Feature lists dictate one particular how, rather than the why or the what.

So what we want to see is more business-driven requirement documents, which
1) Identify the business, application and user needs- the why
2) Identify IT operational and technological/architectural needs - the how
3) Identify the most important business results- the what.

Thanks for asking.

Last week, I attended a user/vendor roundtable (literally, around a boardroom table in a law office) organized by a well respected Canadian consultant. There were some dozen customers, Nortel and Microsoft, and Cisco and Avaya. It was intended to provide insights and practical advice to the attendees.

In general, I think the format was very conducive to a good and generally friendly exchange of information over a 2 hour period.

I found myself agreeing with the Cisco spokesperson more often than not.

To Cisco's comment that in today's climate, saving money was very important, I AGREED.

I then observed that Nortel data solutions could immediately lower your energy bill by 40% and your TCO by up to 50% (as verified by third parties). In addition, UC based on software can also save money by unifying the IT infrastructure, not just the user experience.

Cisco then said that UC was about collaboration. I AGREED.

I said this was a narrow view, stating that while collaboration is very important, UC is all about optimizing business processes, a view that resonated with the audience, particularly when I illustrated the point by giving the example of accelerated patient discharge at Orlando Regional Health.

Cisco then said that integrating Cisco-based communications into business applications would take too long to deliver benefits. I AGREED.

This is exactly the problem with Cisco's network-centric approach which inherently creates bottlenecks for enterprise application innovation. With the Nortel Agile Communication Environment (ACE), we developed an app in 10 minutes while on stage at the Websphere development conference. Now that's the path to business agility and application innovation.

So who says I never agree with Cisco;)

Verizon is basing its managed Telepresence service on a partnership with Nortel. The service provides "complete setup and management of telepresence conferences, including pre-connected and configured video circuits, and the ability for users to make conference reservations online."

Makes sense to me. The service will leverage Nortel's extensive global infrastructure of Multimedia Network Operations Centers.

My guess is that Cisco didn't make the short list, because their solution is a closed system locking the customer and the service provider into Cisco, from cradle to grave. Why would anyone invest millions of dollars in a Cisco proprietary solution?

In contrast, Nortel's solution leverages partnerships with industry leading Polycom and Tandberg, to deliver a broad range of desktop and room video interworking. This is a much better fit with what customers really need.

This was effectively the headline that greeted me in the local paper.

The sun rose this morning and the sky hasn't fallen.

So time to ponder yesterday's announcements.

Much of the press focused on the $3.4B loss announced. I'm no accountant but I'm told that these charges have no bearing on our current cash position ($2.3B in cash).

Personally, the announcement of 1300 layoffs hit me closer to home. It's very sad when the friends and co-workers find themselves out of a job, after working so hard for something they believed in. But hopefully those in Ottawa will find a job quickly. Consider that in 1997, there were 900 knowledge based companies employing 50,000 workers, while today there are over 1800 companies employing 80,000 workers. And Ottawa is not unique. Good luck and thanks for your contribution to Nortel- the press may not know it but I know our customers do.

The next element of the announcement was the departure of a number of senior executives, among them John Roese, our highly outspoken CTO. I had a lot of time for John. His blog shoes will be filled by Phil Edholm, the Enterprise Corporate Strategy Officer. Phil is no less opinionated and already has his only blog.

John's year-end departure marks an aggressive shift highlighted in today's headline that moves head quarter roles such as the CTO/CMO into 3 lines of business, one of which is enterprise. For me, this establishes the strongest enterprise focus I have ever seen in Nortel (and I've seen a lot over my 36 years here), with sales, marketing, R&D, operations and services under one president, Joel Hackney. This along with great people, strong technology, and discerning customers aligns our stars--- we now have to deliver.

Let me end by highlighting a recent win. HSBC, about as technology and business savvy a customer you can find, chose a Nortel UC solution based on the Nortel Agile Communication Environment. This is a great endorsement of our strategy of becoming a software and services company, or as Joel says "a Communications Integrator".

The sun may have come up, but Nortel, our customers and the industry at large have a storm to weather. I think Nortel is better prepared than it was even a few weeks ago to come out stronger in the end.

If you are an American, your challenge is separating facts from rhetoric. Hard as this may seem, please make your choice and vote. If you are not an American, you will be watching with great interest on the sidelines.

But in IT, there are no sidelines and there are hard facts!

Who offers 7x better resilience?

Who offers 20x better performance?

Who offers up to 50% lower TCO?

Who offers 40% lower energy consumption?

Who is tightly integrated with Microsoft's OCS? Or with IBM's Websphere or Sametime?

Who offers multi-vendor communications integration software and services?

In IT, you have a choice.

The highlights of any CIO summits and customer advisory councils that I have participated in, has invariably been listening to and learning from CIOs exchanging views on everything from green IT to alignment with business priorities. The truth is that peer CIOs are by far the best source of knowledge and expertise, especially in the area of business transformation.

Now Nortel has taken a significant step to broadly share its real-world IT experience in operating a global enterprise, using Nortel technology and services.

In addition to business cases and implementation guides, the 'Nortel on Nortel' site includes free downloads of software utilities used in-house by Nortel IT to better manage their network.

A couple of examples. By having one-third fewer data center rooms and 1800 fewer servers, Nortel avoided an estimated 15M kWh of energy valued at approximate $530K annually. Nortel realized over $12 million in annual savings with a 10-month return on investment through its implementation of unified communications (I have been using it for over 6 years and couldn't live without it).

Nortel CIO Steven Bandrowczak knows that, if the business case for using Nortel technology doesn't make sense for us, it will not make sense for our enterprise customers.

The challenges of Hyperconnectivity are clear: lower personal productivity and unsatisfied employees .... ineffective distributed teams and missed milestones and/or poorer quality of deliverables ..... on-hold business processes, slowed down by not being able to reach decision makers in a timely fashion ..... connectivity mayhem with a plethora of network attached devices .... exploding IT complexity and TCO.

So what should you do?

Well a couple of months ago, I set out to answer the question. I spoke to customers, listened to what analysts had to say, explored how Nortel IT was approaching the challenge and defined five high level calls to action.

I then captured the information in a white paper, aptly called "The Hyperconnected Enterprise- a CIO's Survival Guide".

Is the term 'survival' too strong. Frankly, it wasn't my first choice, preferring terms such as 'strategic imperatives'. But I went along with this suggestion, since the job expectancy of CIOs these days is based less on operational metrics (though still table stake) and more on delivering enhanced business value to the business, whether the business is a bank, a not-for-profit hospital or government agency.

There's more. Check out some video podcasts (I personally liked the animation-enhanced YouTube video) and an article by Joel Hackney, the President of Nortel Enterprise.

The stats are awesome:
- $400M IT budget
- Keeping track of 200000 accreditations, that includes, as well as athletes, judges and coaches, 21 600 journalists
- Moving, processing and storing data for 10,500 athletes, participating in 302 events in 28 sports at 39 competitive venues over 7 cities
- 1 million pages served per day across 1100 servers

And the world watches:
- 4 million spectators at the event
- An estimated 4 billion television viewers
- An expected 11 billion web hits

And we, at Nortel, know what technology it takes to stage such a world class event, since we are helping deliver flawless communications experiences at both the Vancouver 2010 Winter Games and the London 2012 Summer Games.

You may want to read the technical paper I wrote on a behind the scenes view of the first all IP Network that we are building for Vancouver.

Enterprises need to think three times before looking at post acquisition Gores Siemens Enterprise Networking (SEN).

1. SEN didn't have a data play and used to partner with a number of data vendors. Now they have had a tier 3 data player thrust on them, previously Enterasys, previously Cabletron. If you are looking for a data solution, Nortel Business Optimized Networking is a lower risk approach delivering 7x the reliability, 20x the performance, requiring 40% less energy and delivering up to 50% lower TCO compared to Cisco.

2. Are you a Microsoft shop? SEN used to be very closely aligned with Microsoft but that relationship has gone belly up. So how will Gores-SEN meet your UC needs? Don't go there. Better consider the Nortel-Microsoft Innovative Communications Alliance with 800 wins to date.

3. Are you an IBM shop? SEN OEM'd voice technology to IBM, so no reason to consider Gores-SEN as well? I would say forget it. The Nortel BM Alliance includes joint marketing and selling, UC software solutions for SMBs (SCS500), joint UC solutions, SOA for Communications Enabled Applications, and joint professional services.

Finally, you should additionally be concerned on how Gores is going to satisfy its investment targets. Are cost cutting and staff reductions planned?