Simon Beresford-Wylie: NSN needs to help its
customers achieve a dramatic growth in traffic without extra
The merger in 2007 between Nokia Networks and the network
communications division of Siemens took longer than expected to
get started but now, says the CEO, it's moving faster than
The creation of Nokia Siemens Networks, announced in the middle
of 2006, was due to be formalised from January 2007. It wasn't,
leaving Simon Beresford-Wylie hosting a booth and both customer
and press events at 3GSM in Barcelona the following month as a
CEO-designate, still not an official CEO, of a merged company
still not officially in existence.
The not-quite-ready Nokia Siemens Networks was able to give an
indication of its future product strategy at the February 2007
That changed from April 2007, after Nokia had satisfied itself
about the problems that were emerging from the long-running
corruption scandal in Siemens.
Since then the pace has been fast, says Beresford-Wylie. There
was even some benefit in the delay, he suggests, because
executives had a huge amount of planning to do during the
"We went through a wonderful planning phase, which was delayed
by a quarter," he says. "By the time we got to April 1 we were
almost all planned out."
In theory, anyway. "What looked like beautiful plans on paper,
when you got to the implementation, were not necessarily as
good as you think they were going to be," he says in
retrospect. "There is a need for a course correction. We've
been doing some of that to make sure we don't have heavy
bureaucracy or too much centralisation."
Now, he says, one of the key lessons of that time is the need
for speed. It's a lesson that is "probably true of any company
that's going through such a large integration", he adds.
Consolidate, leverage, transform
"When we put our plan together there were three elements
— consolidate, leverage and transform."
Stage one was consolidate the business, get it integrated, get
it restructured. Then "leverage our assets", its presence in
each country and its portfolio. Then transform.
"We thought consolidation in 2007-2008, start the leverage in
2008 and take it to 2009, 2010, and then when we've got through
this we can move gently into the transformation towards
solutions and software and services."
That leisurely schedule was torn up within months. "We got to
the end of the second quarter and decided that wasn't the way
it's going to play," he reports. He and his colleagues decided
instead that they needed to do "all of this at the same
And so now, asked to summarise what he's have done
differently, he says: "Speed, speed and speed. But we are
speeding up now."
In more detail: "We're speeding up our integration, our
restructuring, and putting a huge amount of focus into the
transformation as well, which is reflecting what's happening in
our customer environment."
Nokia Siemens Networks — the name is long and still
isn't naturally abbreviated to NSN — needs "to become
a lot more solution-oriented, a solution company", he says. It
needs to help its customers "master the dramatic growth in
traffic that's coming without a lot of extra revenue".
The first few months after the official creation of the merged
entity in April 2007 were also, shall we say, challenging. The
second quarter of the business year, but the first of NSN's
existence, was "very difficult", says Beresford-Wylie. "The
third quarter showed turnaround."
But that period was clearly unhappy for all concerned, and it
seems that both Nokia and Siemens were wondering if they'd done
the right thing.
Nokia CEO Olli-Pekka Kallasvuo "said he wasn't happy with the
results" at the end of the second quarter, says
Beresford-Wylie, and before the third quarter results were out
Peter Löscher, who'd just been brought in to clean up the
rest of Siemens as new CEO, said he was disappointed with
"If you look at the language we've all been using", everyone
was disappointed, says Beresford-Wylie. "He externalised
something that was a statement of fact — none of us
were happy with the second quarter. But that was a comment made
at a point in time."
Since then both Nokia and Siemens are making much more
positive noises. In January Löscher told reporters that
Siemens is now happy with the development of NSN, which is
performing well in a difficult market, he said. Kallasvuo is
also said to believe good progress has been made, though more
remains to be done.
"It's the shareholders' prerogative to say what they feel,"
So is he happier? Savings through synergy have started to take
effect, he says. "Our operating expenses have come down well.
We've closed around 200 buildings, as an example."
And the company has negotiated with its 25 top suppliers
— representing some 40% of its procurement budget
— and pointed out that "we're a new company, and we
buy more from you," he says. "We'd like to discuss what we buy
and how much we pay for it."
NSN has additional scale "and that means more buying power", he
adds. "So it goes through the whole value chain."
There were other challenges in the merger: new processes are
needed, IT systems need to be merged — and at the same
time disentangled from those of the two shareholders. People
need to be put into a new structure, and a new human resources
system is needed to approve the structure.
Inevitably, there are hiccups. Emails to someone who was
@nokia.com or @siemens.com might not find them @nsn.com and
might get bounced back to the sender. It's is all "more
complicated than it looked on paper", says Beresford-Wylie.
"We've taken a lot of feedback — very open, robust
feedback from teams."
And when he says robust, you can imagine he means robust. He
was impressed with the IT department: "On April 1 the intranet
was there, the email was there", he says. "We're getting the IT
systems in place far more quickly so we can get to a global
lean operational mode faster than we had envisaged."
But a more than once in the interview he mentions "HR
approvals", and one can imagine a few robust comments on the
lines between Siemens' headquarters in Munich and Nokia's in
Espoo, near Helsinki, about the process of getting the right
people in place.
And the business systems: "Frankly during that first quarter it
was very difficult just having visibility to the business
— what's actually happened with sales and margin and
so on," he says. "That we're speeding up."
CEO of Nokia Siemens Networks since the merged
company came into existence officially in April
UK born, dual UK-Australian
BA degree in economic geography and history from the
Australian National University
Graduate of the executive development program of
Stanford University/National University of
General manager of Telstra's banking and finance,
corporate and government business unit 1993-95
CEO of Modi Telstra India 1995-98
Joined Nokia in 1998, first as director of business
development in Asia Pacific
Managing director and area general manager, Nokia India
Senior VP of Nokia Networks and CMO, 2002-03
Senior VP of Nokia Networks, Asia Pacific,
Executive VP and general manager of Nokia Networks and
executive board member of Nokia since February
Internal communications weren't all they should be, he says.
"We've spent a lot of time communicating," he says: "The
feedback we get consistently is that we're just not doing
enough. You just have to communicate, communicate,
This has to be face-to-face. "It's not enough to do emails and
webcasts. It's about getting out and meeting with thousands
upon thousands of people. One could always do a better job and
we feel that we could do a better job, that we should have done
a better job and that we will do a better job. I don't think
we've done a bad job — we feel that we need to lift it
up another notch."
Did that affect customers? Beresford-Wylie thinks not. "We
track very closely our customer loyalty and customer
satisfaction. I can say, hand on heart, our customer loyalty
results we have seen during the last couple of quarters as a
new company have been higher than either company achieved as a
standalone. That has come as a very pleasant surprise."
That is because "our teams have worked very well to mask the
complexity of the systems issues, the order processing, all
those sorts of things", he says. "We haven't lost any execution
rhythm, or delivery capability rhythm."
What about the details of actually merging the product
portfolios of the two parents? Not a problem: that "went
surprisingly well, went very smoothly", he says.
"We didn't have a lot of overlap. We didn't have a lot of
geographic overlap, so we didn't have to wrestle with that. The
decisions we were able to make were relatively straightforward
on the portfolio."
Beresford-Wylie, 50 this year, is a British and Australian
citizen who worked for Nokia since 1998, after spending a long
time in the Australian incumbent Telstra — where he
helped to launch one of India's first mobile operators, as a
joint venture with a local company.
So, as a British Australian, what about the cultural
challenges of integrating a Finnish company with a German
Difference or similarity
"What we realised when we put these two companies together
is that it's more than Finland and Germany, it's more than
Nokia and Siemens. It's also fixed and mobile."
It's more than that: "If you look at what's happening with our
sector, and the speed of change, then actually the bigger risk
to our company is not the cultural difference but the cultural
The problem is, he says, that "we're probably about 90% the
same", he says. "People tend to focus on the 10% difference
rather than the similarity."
The similarity stems from the fact that both Siemens and Nokia
are "traditional telecom infrastructure companies with their
roots in Europe, dealing with an operator community of a
And that isn't necessarily right for new markets, for the
shift to all-IP systems, for the wish for converged services.
"The 10% difference is the thing that you deal with in the
present day, but taking a three-to-five year view that's also
That takes us naturally to where the company is going. "The
fact is that the market is shifting dramatically," he says
— towards India, China, Latin America, the Middle East
"So when we look at our product development, when we look at
our research and development, when we look at where we put
various functions we need to be more balanced. We need to be a
global company rather than a European company that does
And NSN has acted on that already, he says. "We've appointed
Rajeev Suri as our new head of services. We're going to hub the
services business out of India. It's not just about cost, it's
about getting close to a market where a lot of innovation is
coming from now."
Head of services
Suri, with Nokia since 1995, became head of NSN in the
Asia-Pacific region when the merger took effect, but became
global head of services in August 2007.
"If we look at product development, architecture development,
India and China are markets together of 2.5 billion people,"
"People tend to think of cost, cost, cost. No it's not, it's
about market proximity. That is one of the points that's very
much in our mind in terms of transformation."
One third of NSN's employees are in Finland and Germany, but
"the market is not in Finland or Germany, or Europe or
America", he says. "It's actually increasingly in India, China,
Pakistan, Bangladesh, South Africa, Brazil and so on."
But that's a particular challenge for any company based in
Europe or North America, because it has to compete with vendors
that are rooted in those markets — particularly China
— and have a deep-seated presence there. How does
Beresford Wylie plan to cope with that vigorous
"The first thing is we have to be competitive," he says. "Our
cost base has to be competitive — our research and
development costs, our operational expenses, the things that we
procure, the products that we make."
NSN has "a significant and growing presence" in India and
China, he points out. "We announced a $100 million investment
into India, in manufacturing, bolstering our research and
development. We've announced an increase in our R&D in
China, specifically in Chengdu. We are manufacturing in both
countries, we do significant R&D in both countries. We need
to be there and we need to have a competitive cost base. That's
the first thing."
But there's also innovation, he says. "We're not going to be a
Chinese or Indian company — we will be a global
company and we will always have a very, very, very significant
presence in Germany and Finland. We're not about to shut up
shop here. We have a very large presence and so it's really to
the business units and the R&D to out-innovate the
That's a challenge for the Germans and the Finns and the other
Europeans in NSN. Let's be basic about this: what are the
benefits of being in Finland and Germany apart from the history
of the company?
"There are a number of things," says Beresford-Wylie. "A strong
innovation capability in Finland and Germany. The expertise
around optical, around RF engineering, around intelligent
There is "an ecosystem of universities and standardisation and
innovative operators here that are important", he adds.
Heart and soul
"And I think every company has to have its heart and soul
somewhere. Our heart, our soul, our 300 years of history are
rooted in these two countries as well. So we have 140 years of
history from Finland and 160 from Germany in terms of Siemens
and Nokia. That provides an emotional anchor and also a very
strong value base with which to build a company and one needs
to be cognisant of that."
And — despite what some might say — they can
be manufacturing centres, he asserts. "We manufacture a lot in
these countries. Manufacturing is a very automated process.
These countries are well connected to the rest of the world in
terms of transport infrastructures. There's a lot here."
NSN is not standing still. Within months of the merger, the
group agreed to take over US carrier ethernet company Atrica.
Just as that deal was about to close, in early January 2008, it
agreed to spend €140 million on Apertio, a UK company
which provides subscriber data platforms and
Apertio will become a new business line within NSN's converged
core unit, to be headed by Apertio CEO Paul Magelli, but the
interview with Beresford-Wylie took place before that deal was
So what's the background? "If you look at the vision for the
telecoms world in 2015, we're talking about five billion
connected people, and this will lead to a increase in traffic
in the next seven to eight years," says Beresford-Wylie.
"Clearly the operator revenues are not going to grow a
hundredfold — most analysts would suggest a few
percentage points: so, a huge growth in subscribers, a huge
growth in traffic." How do operators build a business case to
haul that traffic around?
"We have a view of the architecture," he says. "We have to
simplify and flatten the architecture, from the core through
the transmission into the access networks, fixed broadband or
wireless broadband. We're working very hard on that."
Ethernet will push out further and further to the edges. The
Atrica acquisition is about putting money where this needs to
go — carrier ethernet, mastering this hundredfold
increase in traffic and boosting our capability to tackle the
innovation challenge and make us competitive.
Does that mean there was a gap in Nokia's and Siemens's
capabilities? As far as Atrica is concerned, more a gap in
Nokia, he implies.
Siemens "brought a tremendous asset in terms of transport" and
it "had been investing in carrier ethernet — their
vision was in carrier ethernet", he says.
Nokia Networks had "grown up in mobility", he adds, and "we
hadn't fully appreciated what was coming our way with this
growth in data".
NSN is learning this lesson: "The transport business is a
growing business, we're focussed on that," he says.
That means next generation broadband, both wireless and fixed,
including passive optical networks and WiMax as well as HSPA.
There is some "sharp R&D there", he notes.
At the same time the company is looking at the operational and
business support systems — a hint at the Apertio deal
that was still to come, perhaps. "We need to manage all the
complexity in networks. We need to do that organically and, as
we execute our strategy, we have the opportunity to buy."
But like other vendors — primarily the Western vendors
Alcatel-Lucent, Ericsson and Nortel — NSN is starting
to develop its activities in managed services and other
outsourcing. Beresford-Wylie wouldn't say what share of the
company's business this sector accounts for, "but let me put
them into four categories".
One and two are to install "what we sell" and then "care for
it", he says. Beyond that there are "two new developing areas",
First, consulting and system integration, "consulting our
customers about business processes, working on energy
management, security — very big issue, a very fast
And then "managed services, clearly growing faster than the
market generally", he says. NSN is "probably remiss in pointing
at just how successful we have been", he adds, citing deals
with Deutsche Telekom and 3 in Austria, Bharti, Vodafone in
India, Vodafone Australia and Telemar Oi in Brazil among "160
managed services relationships".
And India is the centre of that business, not because India is
cheap but because "operators in India are working at such an
efficient and low cost way", he says. Hence the appointment of
Suri to run NSN's services, "based in India because of the
learnings and experience we've been able to develop there.
There are learnings we can take out of there, practice and
tools." There is "a lot of innovation around managed services
And NSN has "a good global network operations centre there
too", which the company "will be looking to leverage".
But the Indian market is different for NSN than markets in
Europe, he says. Typically, in India, "we go in and design the
network, we roll the network out, we integrate all of that and
then we manage it, and we manage the whole constellation of
services around it", he says.
"It's quite a different scope" from the "box provision"
business model. But "if operators come to us from other markets
and would like to have a similar relationship, let's talk
In India "there is an extra competitive dynamic", he says,
because of "the sheer size of it".
It's "a China-like market that started five or six or seven
years after China", and since then "everybody has been diving
in there". By 2000 there were only five million mobile
customers in India: "Now they're adding eight million a
So what we're seeing as a result is the opportunity "to
transform into a true solutions company", says Beresford-Wylie:
"not just to be another me-too telecom infrastructure company
that is providing very fine boxes, but just boxes".
The challenge is "really understanding where the market needs
are, where the customer needs are and becoming more solution
oriented", he says. "Behind that there is a massive
transformational requirement. If we can do that it gives us a
certain differentiation relative to those new emerging
companies that are more commodity oriented in their business
model. That's the big opportunity."
But what's the biggest threat to Nokia Siemens Networks? "That
we don't have the speed in terms of execution, in terms of
Back to speed. That's what you need with a merger: speed,
speed and more speed. GTB