Interview: Bill Archer of AT&T

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Interview: US-based operator AT&T is to boost its spending on services for multinational enterprises this year. Bill Archer tells Alan Burkitt-Gray how the company decided on its priorities for the investment programme

Bill Archer: set the framework for where we want to take our business in the future

At the beginning of March AT&T announced a plan to invest $1 billion in strengthening its services for multinational enterprises. This move represents a 33% rise on the group's investment in the business sector for 2007 and will see AT&T add capacity throughout the world, including south-east Asia, Australia, India, the Middle East and the Caribbean.
The group is adding nodes in places such as Paris and Moscow, Shanghai and Singapore, and Kuwait and New Delhi. Its ethernet services will be expanded to 14 cities, including London, Frankfurt and eight other European locations as well as Hong Kong and other cities in the Asia Pacific region.
There will be new MPLS routers in Europe, Asia and the US, and AT&T says it expects to have an ethernet footprint in 39 countries by the end of 2008. More money will be spend on increasing capacity of its 38 data centres by the middle of 2009.
The aim is to build up its IP-based data, voice and video business with large companies. It's a salutary thought that, while the attention of the public and the industry itself is often focussed on exciting new consumer services — broadband content, mobile advertising, IPTV systems for example — many operators generate their real income from large companies.
Multinational enterprises don't walk through the shopping mall churning to a new mobile operator at every corner. But they are demanding of their operators in different ways — which is why the large operator such as AT&T have to commit large amounts of money to developing their networks and their services to win and keep big users.
And so often the people from the operators who are in day to day contact with those large customers — and potential customers — are the chief marketing officers. It's their job to know what customers want and to do what they can to ensure the operators meet their needs.
"That's a fundamental responsibility of mine as the CMO of AT&T Business," says Bill Archer, who has been in the job for about a year. "I lead. I'm the catalyst for the planning process in business. It's up to me to set the framework for where we want to take our business in the future."

Bill Archer

CMO, business for AT&T Operations since April 2007

BSc in business administration from Providence College, Rhode Island

In AT&T 27 years, in sales, marketing, strategic pricing, customer servicing and product management, then becoming VP of sales for AT&T in US

2003: became president of AT&T for Europe, Middle East and Africa, based in London

After two years moved back to the US as senior VP of product management at AT&T Operations — responsible for development, lifecycle management and financial performance of the business services portfolio, including services moved from the SBC and BellSouth mergers with AT&T

Understand what's important

His role is "to identify the trends that are influencing our customers", he adds. "It's my job to understand what's important to our customers, my job to scan our industry, what's happening around us, to look to the future to see what might happen."
Which means he's the ideal person to talk to about what is happening in the wider economy, and how a company such as AT&T ensures that it can deliver what its customers need.
Archer has considerable international experience. Not long ago he spent two years in London at president of AT&T — before the mergers with SBC and BellSouth — in Europe, the Middle East and Africa. Following the expansion of the company in the series of mergers, he has kept his international perspective.
"One of the key themes for this $1 billion investment is the enhancement of our ability to support global multinational firms," says Archer. "Our global multinational target base is roughly 2,000 companies and we are very explicitly focussed on this group of customers."
This target includes companies headquartered in the US with global operations, or those based elsewhere in the world "that have significant needs outside the US and do business here in the US and require networking and services", he says.
It's less often that AT&T finds itself working for companies that are entirely outside the US, with no presence in that market. "We have a very large and important domestic US business," points out Archer, "and these investments also support our local US customers so there is the added benefit of being able to spread the value across a wide base of clients".
The Global Business Services — or GBS — division records $33 billion in sales, he notes. Of that 57% is retail multinational business, from both the US and the rest of the world, and the rest is wholesale business.
"We have 120,000 customers," he adds. "It's our belief that the combination of our global assets and our strong presence here in the US position us uniquely to serve their requirements. A major theme is to sustain our leadership in providing worldwide solutions that are consistently delivered in every region of the world to the most sophisticated users of networking capability."
So what are those big users telling Archer and his team? And what are he and his colleagues at AT&T thinking about?

Consistent fashion

Three things, he says: globalisation, virtualisation and mobility. We take them one at a time. Companies "need to be able to operate their business processes in a consistent fashion wherever they are round the world", he says. "They need to be able to create a single entity across multiple geographies, binding together the organisation worldwide and taking advantage of the developing economies. This has a very important implication on networking."
A "major focus", he says, is to deliver "our capabilities consistently around the world where our customers wish to operate. I can't emphasise enough the importance of consistency and having a portfolio of offerings available to our clients everywhere around the world so they can operate in the same way in every region. That creates advantage for them — so we're committed to achieving that."
Virtualisation is important because of "a change in company business models, where companies are outsourcing processes to third parties and relying on new ways of performing functions, often using services in other geographies" he says. They "still have to present a cohesive and coherent face to their clients".
It affects "the way companies tie themselves together with their suppliers and business partners". The better they are able to do that, "the more effective they will be in their industries and in adapting to change".
He defines virtualisation as "taking networking and computing and our management expertise and allowing companies to connect business partners, their own employees and their customers seamlessly, wherever they operate".

Application services

AT&T will "continue to expand our ability to provide application services that are adjacent to classic networking and add value to the network and allow companies to address the changing business models they're using to be effective", he adds.
And of course we are now in a mobile society, he adds, so he has to consider "how society has become very mobile and very much on the go, operating seven by 24 around the globe because the technology allows them to do so", he notes. "We think a big part of what a company needs to contend with is how to harness mobility and put it to use."
AT&T and its customers have to be able to make a mobile connection "perform exactly like a wired connection would", he says, "wherever your employees need to work. We have a big stake in that objective." And AT&T is "the largest mobility provider in the US, with more than 70 million customers", says Archer.
"Our customers can roam on the GSM standard to 190 countries for voice and 145 for data. That gives them the portability and freedom to move around. We're going to continue to invest in mobility, particularly in high speed connectivity, to enable that mobility to grow and to be enriched.
Summarised, part of his task is "to synthesise all those inputs and come up with a cogent direction for GBS and demonstrate where the opportunity lies for the company".
The next stage is "to take the investment plan and to point it at achieving a set of business outcomes", he adds. "I'm a catalyst for identifying the opportunities and what's important to our customers, putting a plan together to pursue them, and identifying what the returns will be if we elect to head in those directions."
And then, "when we make a decision to proceed, I then preside over those investments and ensure that we deliver on them", he says.

Expansion of services

There are two elements to the $1 billion investments that AT&T announced. "A large component of the capital programme is geared around expanding our VPN services, building out our data centres and hosting capacity," says Archer.
The company will create "200,000 square feet of new data centre space between the end of 2007 and the first part of 2009", he says.
In addition it will be expanding the network application capabilities that reside in its data centres "and provide such services as virtualisation and utility computing and fully managed hosting".
AT&T has a US agreement with software company SAP, announced in January 2008. "SAP announced in North America that for companies with revenues more than $200 million annually AT&T would be the preferred hosting partner," says Archer.
"That means that as SAP works with clients to place its application capabilities in a client environment and a customer is seeking to put the application on a data centre other than its own and have it managed by a company other than itself then AT&T is the designated SAP partner to perform those services."
This operation will be run through a division of AT&T called USi — US Internetworking — which is a company acquired in 2006. "It was an early leader in the application management business and through that set of expertise and resources we've developed this practice which is very complementary to our networking business and our hosting business," he says.

Enterprise applications

"Customers are effectively putting enterprise applications into a network and connecting their business partners and associates," he explains.
"We can provide and end-to-end service and can deliver economies that otherwise can't be obtained."
There is a "very nice matching of competencies between ourselves and SAP", and in addition AT&T is working in a similar way with Oracle and other software firms, he adds.
"There is a variety of services that are application-oriented, where the customer gains benefit by putting the application in the network cloud, and we are responsible for integrating the network including any application, for very high performance and low total cost."
AT&T is not acting as a software integrator in this, he emphasises. "We're not writing new applications, we not doing business outsourcing, we not doing coding of new enhancements of software applications. We see this as an extension of our networking capability. We run the end-to-end service as an integrated capability for the client. We can deliver efficiency and performance improvement."
But the SAP deal is very specifically for North America only, which seems to go against the globalisation idea. Is there any plan to expand the service outside North America?
Archer answers carefully. "Nothing to report at this point," he says. "But we have a significant global hosting presence and we intend to move our application management services offshore so that we provide similar capabilities to our global clients in 2008, and if the opportunity presents itself SAP would be a good addition to those capabilities."
In North America the SAP deal means AT&T has "sole responsibility for managing the performance of the application and assuring the integrity of the performance through its lifecycle for the client", says Archer, "and that means also sustaining the servers on which the application resides and connecting them to a network that the client and its business value chain uses to reach the application and interact with it."
At the same time, AT&T is allocating part of that $1 billion to "to support a growth in our ethernet capabilities", he adds. "We announced an investment in the global ethernet service that companies will use to network their locations worldwide using ethernet protocol and there are a series of other enhancements to our service line."
And some of the expenditure "is geared to expansion of our reach and depth worldwide", he adds: "the addition of new global nodes and the expansion and greater capacity in our global network in all regions of the world."
More specifically there's investment in terrestrial networks and in subsea capacity. "There are new cables that are being commissioned and we are seeking to participation in those," he explains. "Wherever we see demand occurring — which is typically between Europe and Asia and between the US and Asia — we are seeking to augment our existing capacity."

Demand expansion

Does this mean AT&T can see the day when capacity starts to run low. "There's adequate capacity today," says Archer, but he warns of "the expansion of demand that will inevitably occur as the economies of Asia, the Middle East and certain parts of Europe and North and South America continue to grow". This will result in "demand expansions and the need for more capacity".
That's one of the reasons AT&T is "moving to see that we're more than adequately supplied", Archer explains. "Capacity assessment is a pretty dynamic process. As we look at our network we have multiyear forecasts and plans and they certainly anticipate long-term volume growth."
Assessment of subsea demand is more complex, "because the build cycles are longer", he notes.
"We have a common platform that is established worldwide, so we can move on capacity expansion as demand increases."
Are there any particular regions where the company is investing more heavily? "The demand picture looks very good to us in all regions because companies operate in all regions and they need networking connectivity in all regions and they want consistency wherever they operate."
But, pressed on this, he says: "The developing economies like the Middle East and India and Asia are very important to us. We're investing in all regions of the globe. We have people in every region who are indigenous to those regions and understand well the challenges that exist."
The main driver "is where our customers tell us they want us to be" he adds.
Since the middle of 2007 there has been more than a little uncertainty in financial markets, as the sub-prime crisis has hit a number of banks around the world. How has that affected the customers and potential customers that Archer talks to as CMO?
Not at all, he says. "Our customers we continue to believe look at networking as a critical asset to their businesses and a way to improve the way they perform and to be more effective," says Archer.
"Networking helps companies create more velocity, and velocity in business creates more competitiveness. When you add speed to the way you perform as a business you get advantage, and advantage translates to more business success, so we think networking is a vital asset for our large business customers. Investing in networking is a way for them to create business advantage."
So no change, no caution in customers' plans to buy more network or take capacity in data centres? "We haven't see any change at this point," says Archer. "No change." GTB