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.
Read Complimentary Relevant Research
Top Strategic Predictions for 2019 and Beyond: Practicality Exists Within Instability
Technology-based change is happening continuously, and most organizations struggle to see the change in advance. Continuous change can...
View Relevant Webinars
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
Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes, with attribution to Gartner. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an "as-is" basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.