Scott Kriens: relentless pressure on cost and optimisation
It's tough being a service provider, but Scott Kriens, founder and CEO of equipment vendor Juniper, is confident that some of his customers have significant advantages in the marketplace.
They're competing against a range of companies that are offering new broadband services, yet the traditional operators have something that the newcomers do not have, says Kriens.
They're actually the only service provider that is directly connected, he points out. "Everyone else depends on the customer coming to find them, and the traditional service provider is the only player who actually goes out and connects himself to the customer," he says.
"There's a huge opportunity for traditional service providers to take advantage of the fact that they are directly physically connected to the customer," says Kriens, who has let Juniper Networks since helping to set it up in 1996.
Chairman and CEO of Juniper Networks, which he founded in 1996
Service providers need to get away from the idea that they're just a utility, he says. "There is an issue of privacy", but there is a real value in the information they have about customers — and they can gather more, with customers' permission, in exchange for appropriate deals, such as cheaper services.
He quotes an example: if a customer is willing to share the information that they're planning to buy a car in the next three months, they can receive targeted information. Kriens says the service provider should say: "In return for sharing with us your interests we will give you a different rate of service."
Community of users
In this way the service provider will have a community of users who are going to be in the market for a car in the next 90 days. From a car company's point of view having a list of potential customers will be worth more than paying to blast everyone with advertising, without knowing who's interested and who isn't.
"And the person receiving them wants to see ads about cars, because they're trying to figure out how to buy one. There's an opportunity to connect some dots that would create some value for everyone."
Which operators does he admire most for what they have done, not necessarily in advertising but in delivering new services to customers?
"One of the most advanced in the marketplace is PCCW in Hong Kong. They're sponsoring home shopping, they're putting up interactive gaming, with video gaming and gambling, which they can do in Hong Kong. What this is translating to is a huge variety of service propositions for the customer, most of it available in their homes or on their mobile devices," he explains.
Pick up and use
"They have some fantastic stuff," he adds, praising PCCW's chief technology officer, Paul Berriman, for his vision. "They do a good job of synchronising the various technologies and producing something that's very simple for people to pick up and use. We've had a very good relationship with them for a number of years."
One of Juniper's main concerns is what he calls "the high-performance network", which will have three primary attributes: "they're fast, they're very reliable and they're secure — and all of that translates into economics that are very attractive".
That will reduce the cost of capital expenditure and the operating cost, "by consolidating the number of networks, by delivering dual infrastructures or virtual segmentation in those networks so you can run multiple different services from a single point of control."
That's a fundamental requirement, he says. "There's relentless pressure on cost and optimisation." Though there are the long "to help balance the economics so that it doesn't all depend on waiting for this value to be realised", he says. "There are some short-term things to be done that help us get to where we want to go."
Unlike many traditional vendors, Juniper has not moved into managed services, with the exception of some deals in managed security that it has signed with TeliaSonera and others.
"From our point of view the services business and the managed services business is quite different from the innovation business," says Kriens. "What we're interested in doing is innovating with state of the art technology and then cooperating with those who have the kind of workforce and business model around service management."
Which leads naturally on to innovation itself. It's a fiercely competitive industry. How does Juniper manage to spend enough to innovate at the right speed?
"By having a considerable amount of money to spend," says Kriens. "We spent over $600 million last year and will spend more than that this year, and we are doing it with laser focus on high-performance networking."
That will be the focus in the next couple of years: "A combination of intelligence and performance at scale — and all three of those dimensions without compromise," he says. Normally if you want intelligence, the traffic has to go slow, he explains, and if the traffic has to be fast, then "you can't look as deeply into it".
And if you want high performance and high intelligence at scale "it becomes very dangerous", Kriens adds.
"We're spending about as much as anybody, and we have 12 years of learning behind what we do. We know some things that aren't knowable until they've been done. We're awfully focussed and we're learned a great deal. The spending we're doing is giving a lot of leverage," he says.
"What we're providing is the infrastructure and the intelligence that can make the delivery possible. There has to be knowledge of the customers and we provide the network intelligence and the infrastructure that allows you to do that, without compromising the performance of the network in the process."
A few years ago Juniper was instrumental in creating IPSphere, an organisation set up to promote a new set of standards for high-performance use of the internet.
"We nurtured it into existence in the first place but we are only one of many members," says Kriens.
"What they've done is build an architecture around how to enable this type of thing to happen. It's a business model with a network designed behind it, so that people with content and information to share can advertise themselves, and the network itself can become seamless across multiple boundaries."
It's not unlike what happens in the traditional voice area when you pick up a telephone in the US and make a call to the UK. The industry has long had standards over connecting and paying for the call. Now, the says, a similar set of arrangements is needed for IP traffic.
"If I have a high-priority connection, if it's a guaranteed high bandwidth on a connection that initiates in one territory and terminates in another, how do you make sure that's seamless and that there's a simple settlement out of it?"
That's the point of IPSphere, says Kriens. There are operators and equipment providers in the organisation: operators such as BT, NTT and Verizon; vendors such as Cisco, Huawei and Tellabs as well as Juniper.
Is he pleased with the outcome and has Juniper earned business benefits? "It's very long term, as the design of the infrastructure has to be agreed upon and then has to be implemented across more than one operator: all those are in the critical path before we see an obvious benefit. It's a long road and it takes a lot of effort and support."
But structurally it is important to do, says Kriens. "There's progress but a lot of work to do." GTB