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Lucent to Transform KPN’s Network with Help of New Global Center of Excellence| August 28, 2006 | Carrier Infrastructure - Global | Competitive Intelligence Report Analyst: John Marcus
On August 28th Lucent announced a network integration and program management contract with KPN for the deployment and integration of its All IP Next Generation Network (NGN), based on IP Multimedia Subsystem (IMS). Lucent is responsible for the migration of KPN’s existing services and customers to the new All IP network to meet KPN’s announced marketing objectives. • Current Perspective: Very positive on Lucent’s announcement that it was named prime integrator by KPN for the carrier’s All IP network transformation project, and that it will build a Next Generation Network Transformation Global Center of Excellence in the Netherlands. Many vendors tout IP and FMC network transformation services, but close to none can point to a customer win of this scale. • Vendor Importance: High to Lucent, because this is very likely its largest professional services deal so far—worth somewhere in the EUR 200-400 million range—and is a clear vindication of its strategy to invest in multi-vendor professional services expertise. • Market Impact: High on the telecom infrastructure services market, because other vendors with network transformation services in their portfolios and an aspirational focus on fixed-mobile convergence (FMC) not only failed to land this major contract, they will also have to watch as Lucent builds itself an even stronger position for future bids—assuming its delivery of the project is successful. Recommended Competitor Actions • Nortel’s changes in its Global Services organization over the last several months have seemed to echo Lucent Worldwide Services’ strategic moves made two years ago or more. Imitation is the sincerest form of flattery, but now Nortel must imitate LWS’ success in the marketplace. • Ericsson needs to take seriously the threat from Lucent—soon to be made even stronger in services with the Alcatel merger—in network transformation and fixed-mobile convergence deployment and integration services. It needs to show how its experience in transforming Telecom Italia’s network and processes, and its experience migrating mobile networks such as Sprint and Cingular Wireless, have prepared it for the process development, multi-vendor solution design, and multi-vendor, multi-technology network performance management expertise that is required to take on projects with the scope of KPN’s All IP project. • Large IT services firms such as HP, IBM and EDS have been very successful in enterprise IT transformation projects, and bring much of the project management expertise required in carrier NGN migration efforts. What they don’t necessarily have is the level of telecom network expertise. In order to compete, the systems integrators should consider technology services partnerships with network vendors who need more project management depth. • Huawei, which had won the optical transport piece, and Siemens, which will provide softswitch and IPTV platforms to KPN, need to reflect on their place in multi-vendor deals of this scale. Both companies are targeting the integration piece of large system deals, and presumably would have liked to have won that part of the KPN job. • The notion that services, despite lower margins, can be a low cost business (e.g., due to the lack of R&D expense) is a fallacy. Services organizations involved in technology need to make significant investments in people, places and processes in order to be competitive. Recommended End User / Customer Actions • KPN should consider using Lucent for ongoing management of network functions such as field maintenance. Its multi-vendor support capabilities allow carriers to have a single point of contact for equipment replacement and repair, and the shared services model allows for a lower cost basis. • Other carriers with legacy fixed and mobile networks should consider Lucent for network transformation and fixed-mobile convergence professional services. Lucent’s future capabilities in these areas have just become much stronger. • Carriers looking to the services organizations of Siemens, Nokia, Ericsson, Nortel or Motorola for large-scale, complex integration projects should ask them to benchmark their services heritage and resources, geographic footprint, technology heritage and market traction against that of Lucent. They should also ask to see evidence of growing investment in services, particularly in NGN transformation skills and processes. • Carriers should also consider the BT method, wherein the carrier itself took the prime integrator role, giving vendors smaller domains in which to do technology-specific system integration. This approach can work for very large incumbents with well established technology organizations, and with the requisite project management skills.
Also read: KPN Chooses Lucent as Prime Integrator for All IP Network Transformation Project - Business Telecom Services - Europe
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