Lucent puts GNOC at heart of services drive

While some think Lucent Technologies' rival Nortel Networks has turned a corner recently with market share gain and new executive appointments designed to streamline operations and revamp manufacturing, Lucent is sticking to its own services guns, despite what CEO Pat Russo called a “temporary setback” in quarterly earnings last month.

Lucent highlighted its commitment to grow its services business last week at a one-day press and analyst presentation at its Global Network Operations Center (GNOC) in Denver. The GNOC is the centerpiece of Lucent's capabilities for providing managed and hosted services, including managed security services.

Managed security services are run out of Lucent's Security Operations Center, which is co-located, and deeply integrated, with the GNOC.

“We had to move away from that [perception of] stodginess and away from thinking of ourselves as a factory. We believe the GNOC gives us an opportunity to expand our managed services,” said James Haworth, director of Lucent Global Network Operations Centers.

Last quarter, Lucent began reporting earnings under a new segment structure. In addition to mobility access and applications, multimedia network solutions and converged core solutions, Lucent has created a segment just for services, which includes maintenance, deployment and professional and managed services.

The company had expected revenue from services to grow by 10% or higher but is now looking at coming in at or slightly below that marker. Thirteen of Lucent's contracts in the first quarter included services components, including a new contract with Fastfiber for design, installation, integration and network maintenance for its fiber-to-the-business network in the Netherlands. Lucent also signed a contract with Verizon as the first public customer for Lucent's new Hosted Secure E-mail service, a service based on Lucent's alliance with Sun Microsystems and Echoworx, and typical of how Lucent is using its GNOC and secure data centers as bait.

In addition to the Denver GNOC, Lucent also has GNOCs in the Netherlands; Sydney, Australia; and Hamilton, New Zealand; as well as a mirror site to Denver in Lisle, Ill., and an internal NOC in Singapore. Lucent is also setting up a center in Poland.

“These are Lucent centers, so we are not pushing out to outsourcers,” Haworth said. The redundancy, ability to “follow the sun” by crossing times zones, multi-vendor support and the use of lower-cost labor pools help Lucent to more cost-effectively support the managed and hosted services business it is after.

The company claims $1 billion in managed services contracts over the past 24 months and is currently managing more than 40 networks worldwide. But look for Lucent to make announcements soon around its hosted applications and managed security services.

“These are two new lines of business for us within managed services, and they are adding to the bottom line significantly,” said Patrick Matthews, senior strategic portfolio manager for managed and hosted services at Lucent.

Although Matthews admits “the propensity for North American Tier 1 operators to outsource is still pretty low,” he said partnering with them to reach large enterprises with managed services, particularly security, is a strategy that will work.

Lucent doesn't have the best direct channel to the enterprise so operators can bring it there. So can its partners.

“Lucent may not go directly to the enterprise, but Sun does, and we will sometimes bring Lucent along,” said Dave Uhlir, senior director of management services for Sun Microsystems.

Uhlir said that while no one should confuse Sun with a services company, his department is dragging the infrastructure parts of Lucent and Sun into managed services opportunities.

Although trying not to be pigeon-holed as a mobile virtual network enabler, Lucent nonetheless will be going after the mobile virtual network operator market with managed and hosted services. It even raised the concept of being a provider of hosted IP multimedia subsystem, but with a grin, leaving the scent of curiosity in the air. (Read a related story on managed network services on page 15.)