Lynd Morley visits Telcordia and finds a company moving beyond its redoubtable technical expertise to a new approach in product development strategies
Telcordia Technologies is not unlike the telecoms industry itself. The industry, rooted in the principles of guaranteed provision of service, 24 hours a day, seven days a week, usually supplied by state-owned monopolies, has had to learn the fast responses of a lean, mean machine in a competitive marketplace. It has had to change from the equivalent of a giant oil tanker, taking days to turn around, into the sleek, high-speed sailing yachts of the America's Cup. Equally, Telcordia's gravitas and stately pace as a highly respected software developer, focussed on technology, has had to adapt to the new order of customer-centric cut and thrust.
There is no doubt that Telcordia is a telecoms heavyweight when judged on technical expertise, innovative development, and, indeed, sheer brain power. It holds more than 800 telecom patents, and its track record includes the development of the MIME standard, the invention of Advanced Intelligent Network technology, helping to define ADSL technology, and the invention of SONET among many.
The question for the US-based player -- which grew out of Bell Labs and earned its development spurs in an, almost, academic environment -- is whether it can now operate successfully in the far less rarefied atmosphere of a highly competitive commercial market.
Indeed, at Telcordia's recent media and analyst conference, "E3: The Elements of Transformation", Ken Kharbanda, who joined the company in 2003 from a venture capital and investment background, noted: "We have tremendous resources here -- great brains and great technology -- but in the past we haven't had a way of systematically commercialising our ideas, and turning our expertise and technology into products".
All that is now changing -- not only according to Kharbanda, who as Vice President for Corporate and Business Development, is responsible for strategy initiatives and developing new growth areas for the company -- but also according to the wide range of senior Telcordia executives, partners and customers lending their voices to the discussions and debates over the two days of the conference. Indeed, 'Transformation' was the theme of the event, reflecting not only the company's view of its own path, but also the future direction of the industry where the convergence of networks, technologies and services demands the transformation of business models to ensure long-term profitability.
Matt Desch, Telcordia's CEO, has been instrumental in the changes taking place in the company. Within months of joining Telcordia in 2002, he restructured the operation, brought in new blood to key management positions, and stressed the vital need to focus on customers and products rather than purely on technology. He is clearly a man who is not afraid of change, though during the E3 conference his emphasis was on 'transformation', which, apparently, has the advantage over simple 'change' of carrying far more positive connotations. Desch admitted that while transformation could be a hard pill to swallow, it was essential in the current global marketplace, illustrating his point by quoting the words of such industry stalwarts as Intel's Andy Grove who said: "There is at least one point in the history of any company when you have to change dramatically to rise to the next level of performance. Miss that moment and you start to decline". Desch is clearly determined not to miss his moment.
Telcordia's Elementive strategy, launched in 2003, emphasised the move from purely proprietary systems to a new product platform that was standards-based, open, flexible and configurable. Desch stressed that these qualities did not only apply to the products, but also to the company's new approach. "To Telcordians," he noted, "'Elementive' means that we work, and think, and act differently."
This different approach has, more recently, been facilitated by the degree of independence Telcordia has achieved following its acquisition by Warburg Pincus and Providence Equity Partners, freeing the company from some of the restrictions which were an inevitable consequence of being owned by the heavily Pentagon-involved Science Applications International Corporation (SAIC).
Larry Bettino of Warburg Pincus noted that, following the recent shakeout in the telecoms industry, he believed it was now a good time to invest in communications, and that Telcordia was particularly attractive, given that it is among "the most experienced and knowledgeable providers of telecommunications in the world." He went on to stress that the company is also one of the largest and broadest players in the OSS market, offering stability, reliability and service to customers, which, he believed, was not duplicated anywhere else, and undoubtedly also had the experience to partner successfully with network builders. "After all," he commented, "they have been living and breathing telecoms for decades."
At the E3 conference, Telcordia was understandably keen to stress that it was aiming to consolidate on its new position as an independent company by strengthening customer and partner relationships, broadening its product and service portfolio, and expanding its global presence. Desch underlined the company's more partner-friendly approach, pointing to Telcordia's emphasis on providing 'service transformation' through partnerships with the likes of IBM and Accenture, to help CSPs with the complicated task of network change necessary to the deployment of next generation services.
At the same time, the company is aiming to expand it's global reach, establishing a presence in Europe, Asia-Pacific, and the Caribbean and Latin America (CALA), where, for example, it recently established a Brazilian base with offices in Rio de Janeiro and Sao Paulo -- a shrewd move given that the telecommunications market is predicted to grow some 40 per cent by 2008 in the CALA region.
Telcordia will partner with local systems integrators in these various markets, pursuing its strategy to establish a solid presence outside its traditional North American base, and reflecting the essentially global character of any successful telecom player in the current market. A few weeks after the E3 conference, for example, the company announced that Liaoning Mobile Communications, a subsidiary of China Mobile, had selected Telcordia Granite Inventory Management, part of the Granite Service Resource Management Portfolio, which will enable China Mobile to intelligently manage network and service-related assets across the organisation in a consolidated, flexible and service-centric
manner. Commenting on the selection, Liu Cheng of China Mobile emphasised the quality of the technology in the solution, and added: "Telcordia is also providing superior business and technical assistance to China Mobile Liaoning, helping us transform our operations to anticipate and address changing market forces. We are working together with Telcordia on implementing activities across the whole province."
This emphasis on partnership and global spread underlines the company's determination to shed its somewhat 'ivory tower' image -- an aim highlighted by the dialogue Telcordia clearly intended to establish at E3 through the presence of a wide range of guest speakers. These included MCI-Europe's Andy MacLeod, Fari Ebrahimi of Verizon, and Telecom Argentina's Edmundo Poggio who participated in the panel discussion Seizing the Power of Operations Transformation; and Dan Elron from Accenture, Vern Kennedy of Broadview Networks and Joe Gensheimer of Movida, who were the star attractions on the Services Transformation: Converging on a Common Future panel.
Despite the emphasis from Telcordia on becoming more product focussed, in his presentation Desch had commented that while products are undoubtedly the tools of transformation, the process is really about people -- a position enthusiastically supported by the speakers on the Seizing Power panel. Andy MacLeod, for instance, noted that: "Transformation is only a little bit to do with technology, it's mostly to do with people" and added that the focus really has to shift to the customer. He commented, however: "As an industry, we don't do customer service very well. We really have to learn to create an enhanced service experience." Edmundo Poggio added to the requirement by stressing that you have to begin with employees when making sure that people understand the benefits of change, but Fari Ebrahimi pointed out that it is human nature to fear change, so both employees and customers within the industry might well be scared of transformation. He went on to stress, therefore, that the whole process of transformation has to entail education to overcome inevitable concerns, as well as a multidirectional communications process that not only helps customers understand your offering, but also helps the provider understand where the customer is coming from. Indeed, the overall message from the panel was that none of this transformation can be achieved in isolation -- it must include input from all parties, not least of which is the marketplace itself.
Not unnaturally, the talk at E3 focused to a very large extent on "getting closer to the customer" -- a sentiment rather frequently expressed in the industry of late. Desch stressed, however, that in this context the phrase was intended to emphasise the quality of the relationship -- really listening to customer requirements, and making sure that product and engineering services were located geographically close to the customer to ensure true fulfilment of local needs.
For all the touchy-feely emphasis of much of the E3 conference, Telcordia did not avoid tackling some of the industry's hot potatoes, such as outsourcing. Desch explained that the company was offshoring around 15 per cent of software development to such countries as India and Russia, but emphasised that while that figure might go to around 20 per cent, it would not go any higher because the knowledge and expertise built up within Telcordia was vital to its product development. "We're not interested in simply having programmers developing software in a factory-like scenario," he stressed.
At the same time such thorny issues as security and privacy (which were identified as undoubtedly providing a strong differentiator in product offerings) were also tackled, not only in the main sessions, but also in the particularly effective break-out sessions where Telcordia executives, partners, analysts and media installed themselves in small, casually furnished rooms for less structured discussion of the issues -- a further proof of Telcordia's determination to shed its more exclusive and formal image, and even allow many of its prized shibboleths to be challenged in the lion's den. n
Lynd Morley is Editor of European Communications