Consultancy purchase continues transformation of Ericsson
Paolo Corella: There is a growing opportunity driving
Ericson's latest acquisition in the consultancy business is the
sixth in little over five years, and is designed to give the
group significant advantages in the consolidation of telecoms
operators that is about to take place throughout the fixed and
The 1,000 staff of Pride, an Italian consulting and systems
integration company, joined Ericsson's 10,000 existing staff in
this field at the start of February - adding to a portfolio of
Australian, French, Spanish, Swedish and Turkish acquisitions
in a process that has continued since September 2004.
"We see an industry that is experiencing a fast pace of
transformation," says Paolo Corella, head of consulting and
systems integration at Ericsson in Stockholm.
Top of the list of drivers is consolidation in both mature and
emerging markets, he says. "Look at India, where there are 12
mobile operators, but the government is offering four 3G
licences. This will drive consolidation there and this change
process is happening among all mobile and fixed players."
Behind this is a change in attitude among operators, which for
years added new operations and even businesses without thinking
of the extra costs involved.
"During the fast-growing phase of the market operators built
separate silos," says Corella. "For example they added new
network operations centres and put on lost of extra cost. But
now they're looking at all the business processes and are
simplifying operations in order to reduce costs."
These silos are "a fundamental obstacle to innovative business
models", he adds. Compare the competitive companies that have
taken steps to understand their customer needs, he says: Apple
and Google. "They have implemented services that take advantage
of network innovations."
It's up to operators to get more value from the service chain,
he adds. "We see a fundamental opportunity from the business
point of view. There is a growing opportunity driving complex
Which is where, he says, Ericsson can come in, to advise
operators. "We have been investing in software, in OSS and BSS.
We have hired people from the market and we are growing young
talent in the company."
And Ericsson's managed services contracts enable the company to
bring in talent from operators with which the company has deals
- companies such as Sprint in the US and Hutchison in Europe.
"They have brought a big injection of IT skills," he says.
In addition, there have been the acquisitions of systems
integrators and consultancies, of which Milan-based Pride,
announced in January 2010 and completed in February, was the
largest. "It has a very strong focus on OSS/BSS, with
multi-vendor expertise," says Corella. The deal - for no price
has been quoted - strengthens Ericsson's consultancy operations
in the Mediterranean region.
"Pride's core focus is in telecoms, but the company also has
interests in energy, utilities and government," he adds. "That
gives us a change to look at those markets."
But transformation in telecoms is the main driver, though
customers vary in their needs. "Some want to run the
transformation themselves, and some want a full service from
us," Corella explains. "We are not prescriptive. Some of our
customers are keen to retain critical parts of their technology
in-house." Others are happy to let a managed service company
run the radio access network or other parts of the system. "We
can be a project partner or we can run the full programme as a
managed services provider."
He cites one operator which provides fixed and mobile services
as well as broadband, but all in separate silos. "We are
working to transfer the whole operation to one network
operations centre," says Corella. "That will release a huge
part of the cost."
Before all that came a "technology and business process
assessment" when Ericsson "redesigned the system", he adds:
"It's very much something we have developed over time, based on
our managed services experience. We can improve performance,
bring in synergies and methodologies and tools."
Technologies come from Ericsson's own portfolio, supported by
its research and development, or from the open market, he says.
"The customer can choose, especially because there are some
very strong and established players and the customer may
already have made investments. That's why we are not
There has to be an open approach, he emphasises: Ericsson's own
global NOCs are equipped with third-party tools.
This wide portfolio is necessary when companies consolidate, he
points out. They will want to create a single portfolio of
services, with a single billing system, but typically will have
inherited a number of billing and other systems. They have to
be consolidated, "otherwise they won't achieve synergies".
Even without consolidation of separate companies, there is
scope for consolidation of separate units in a company - units
that exist because they date back to the profligate days when
the business was expanding rapidly into new areas.
"I wouldn't say it was bad practice," says Corella. "It was the
market dynamics of the time, and the speed the business has
evolved over the past 15 years. Then, all that mattered was to
get new customers in." Speed of implementation was the key;
efficient re-use of software came second.
Now, the priority is to deliver more to the customer for less
cost. The change is starting, he warns. Ericsson, at least, is
ensuring it is prepared. GTB