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Nortel Bankruptcy: Enterprise Services Focused Business Can’t Stand Alone

by Eric Goodness  |  January 16, 2009  |  Comments Off on Nortel Bankruptcy: Enterprise Services Focused Business Can’t Stand Alone

I’ve read a lot in the past 48 hours about Nortel’s Chapter 11 filing and there is a lot of speculation about the future of Nortel and its next best steps.

A popular line of conventional wisdom emerging on the blogs and in the press is the possibility that Nortel be reinvented as an IT Services-led company.  Few companies have successfully managed that kind of transition.  There are a few network- and voice-OEMs currently working towards the same goal.  One example of success, particularly in the Americas, is NEC.  They’ve taken their lumps as a product company and really done a nice job creating a trusted, go-to organization to provide direct, or private-labeled, multi-vendor IT services to the market. 

The belief that Nortel can similarly reinvent the Company as an IT Services Provider is unrealistic. 

Nortel doesn’t have the bench strength to create, market, sell and deliver services for complex, multi-vendor environments.  The Services organization hasn’t been allowed to thrive and mature appropriately.  Nortel’s decades long recursive history of divestiture and re-investment in the Enterprise and Carrier services organizations is a case study for finger-in-the-wind management.  Of course, these mistakes are common in product-centric companies when they struggle to determine the strategic nature of Services. 

Compounding the problem, the Nortel’s services marketing organization only develops solutions appropriate for immediate plotting on the ‘Plateau of Productivity’ in Gartner’s Hype Cycles. Nortel services have consistently been devoid of innovation.  Most service products are released after Cisco and Avaya have brought them to market years earlier.  Subsequently, new service products are released into highly commoditized environments where no marketable differentiation is possible.  Additionally, the services marketing organization never appeared to actually market Nortel services. 

Gartner’s published Magic Quadrants and Vendor Rating documents have chronicled Nortel’s inconsistencies.  The Services organizations do not provide any foundational strength upon which ‘Nortel 2.0’ can be built.  The irony of course is that the IT services for Enterprise Communications will show good growth, relative to other industry segments, in a recessive economy.  Gartner’s inquiry requests from mid size and large companies looking at single-tower managed service/outsourcing projects are increasing.  Post-recessionary outlook for the market is even better as investments in Unified Communications are expected to show very strong growth.  IT Services is an important catalyst to facilitate market adoption and successful migration to Unified Communications.

If Nortel is going to survive as a Services-led company, then they will require a massive re-evaluation of executive and marketing talent charged to lead those services organizations. 


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Category: infrastructure  it-services  outsourcing  

Tags: avaya  chapter-11  cisco  it-services  managed-services  nec  network-equipment-manufacturer  network-outsourcing  nortel  nortel-bankruptcy  unified-communications  

Eric Goodness
Research VP
10 years at Gartner
21 years IT industry

Eric Goodness is a vice president in Gartner Research, where he is the agenda manager and customer lead for Managed Services in the Communications sector. His research and advisory services focus on customer and vendor outsourcing and IT services… Read Full Bio

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