TeliaSonera Expands Its Managed Services Business

On January 25th Telia announced that it had been awarded six new contracts in Sweden for managed services. Customers are integrating their fixed and mobile telephony services within a single solution that will be leased from Telia. Some customers will only use mobile telephones. In some cases, they have also chosen to purchase the mobile phones from Telia, including service and support.

Recommended Competitor Actions

► Telenor should emphasize its wider global mobile footprint, while providing similar levels of fixed-mobile service bundling in Sweden and the whole Nordic region. With the general migration to mobile voice services, mobile-only voice & messaging services could be a significant add-on to Nordic FMC services.

► TDC should emphasize the superficial nature of the TeliaSonera offering and continue to emphasize its well integrated Nordic IP telephony solutions combined with strong SI capabilities.

► Global operators in the Nordic region lack the mobile element in their Nordic service offering, and so should concentrate on MNC requirements and point to the holes in the TeliaSonera services beyond the Nordic region.

T-Systems Completes gedas Acquisition and Improves Focus Solutions Strategy

On January 19th T-Systems announced that it had completed the integration of gedas AG. The gedas acquisition is geared to improve T-Systems’ position in the automotive, transport, logistics and public administration areas. It is also hoped that the acquisition will accelerate its international growth.

Recommended Competitor Actions

► Competitors should understand that the acquisition of gedas not only enhances T-Systems capabilities in the automotive sector, but has also been instrumental in securing large outsourcing deals in other areas such as a spate of government contracts that it has won in Spain. As traditional telecom services converges with integration at the LAN, desktop and application layers, T-Systems is a much stronger threat.

► While telecom operators may find acquisitions of ICT providers a way of increasing revenue streams, gaining new customers, penetrating new market segments and vertical industries, this strategy has not always been successful. In some cases, they failed. While convergence of IT and telecoms is alive and well, other types of relationships (e.g., outsourcing, focused partnerships, capability extension and joint service delivery) should be considered to achieve desired results.

BT Buys INS and Moves Up the US IT Value Chain

On February 1st BT agreed on terms to acquire International Network Services, Inc., a provider of IT consulting and software solutions based in Santa Clara, California. INS specializes in four major areas: enterprise architecture and governance, business productivity, information risk management and infrastructure transformation. INS employs a staff of 1,000 consultants and it has offices in Europe and Asia.

Analytical Summary

► Current Perspective: Positive on the acquisition of INS, because this improves BT’s professional services and consulting capabilities in the US by adding a force of 600 IT professionals, and it takes BT’s billable consultants to over 8,000 worldwide. This strengthens BT’s IT services capabilities and market position versus system integrators and other global carriers.

► Vendor Importance: High to BT, as the INS acquisition is strategic to BT, which needed to improve its professional services capabilities in order to add value and engage a C-level audience within global MNCs. Cracking the US market is a top priority for BT and INS is BT’s fourth acquisition in the US in the last couple of years, following Infonet, Radianz and Counterpane.

► Market Impact: Low on the pan-European business telecom market, because INS adds just over one hundred consultants in Europe and BT’s old Syntegra and consultant hires from IBM and Accenture are far more active in Europe. However, over time, INS’ know-how and replicable solutions will be integrated into BT’s global go-to-market strategy, and competitors need to plan their own professional services strategy.

Recommended Competitor Actions

► AT&T and Verizon Business clearly have not much to fear from BT GS in the domestic US market place, but their international services proposition will be affected, because their professional services presence in Europe and Asia is not impressive and it does not match the BT Europe-US coverage now.

► Orange Business Services is also building its US presence – albeit slower and organically. However, to penetrate the US public sector, Orange Business Services will need to acquire a well-established US SI or create a strong SI alliance partnership.

► Major SIs such as HP and IBM can expect much higher-profiled RFP bidding competition from BT GS both in the US and Europe. They should emphasize the lost impartiality of the INS advisory services, and at the same time make sure that their own professional services cannot be accused of unduly preferring their own hardware.

► Outsourcers such as Accenture, EDS and CSC can match (and surpass) BT GS in terms of global consultant strength, and they should especially emphasize the lack of serious professional services capabilities of all the global carriers in the Asian theatre.

Recommended End User / Customer Actions

► US customers should consider BT’s new IT consulting and professional services competence with the INS acquisition. The company has served some 75% of Fortune 500 enterprises and more than half of the Fortune 1,000 companies.

► Potential customers should inquire about the timetable regarding migration and integration for this merger. While BT has integration experience with past mergers and it plans to operate INS as a subsidiary in the short term, there are the risks of disruptions that these changes can evoke.