ALU, HP combo to aid service provider transformation

The combination of Alcatel-Lucent (NYSE: ALU) and HP (NYSE: HPQ) will offer telecom service providers an option for outsourcing the transformation of their networks to all-IP infrastructures that deliver managed IT service and applications, say executives of the two companies. While the definitive agreement between the two must still be completed, Alcatel-Lucent expects to see the first fruits of the alliance labors as early as the fall of 2009.

“Traditionally, the equipment providers have been the one-stop shop for big problems for service providers – those are the guys that go in, take over and just fix it,” said Claus Pedersen, director, Communications, Media and Entertainment, for HP. “In this world of convergence, more and more value of service providers is moving up into understanding details of how the customer is behaving and what is the business intelligence that is needed.”

Solving customer problems now requires the involvement of different organizations within the service provider, which makes the traditional vendor approach less helpful, Pedersen said. “Now, my business problem may be how I get from having a bright idea to turning that into a billable reality, and to make that real, you’ve got to have this combination of telecom depth and IP depth to do it in a manner so service providers can compete with new players like the Googles of the world.”

By combining capabilities, Pedersen said, Alcatel-Lucent and HP can talk to the CEO of a service provider, find out the problem to be solved or goal to be reached and create faster resolution of the issue across the networks and network organizations. “We can take ownership for that so he doesn’t have to run 10 different projects at one time and try to deal with the organizational impact at the same time,” Pederson said. “The fact that we have complementary technology is almost secondary to the fact that we can be the trusted one-stop shop for managing these transformations.”

“In the past, carriers had to bring multiple parties in to meet the needs and requirements on particular projects, and piece it together themselves,” said Tom Burns, president of the enterprise product group of Alcatel-Lucent. “What we are going to do with this alliance with HP is to put together the talent and technology from both companies and approach these carrier needs together.”

Transformation efforts will be firmly rooted in business goals, Burns added, primarily generating new revenues based on new services.

In addition, the combination of Alcatel-Lucent and HP will be able to operate networks for service providers, “whether that’s the old infrastructure they want to retire and they just want someone to run it while the customers move off, or they want to avoid the risk of running a new network and just concentrate on their business,” Pedersen said.

In many cases, based on their experience, HP and Alcatel-Lucent will be able to pre-integrate technology solutions to speed the process as well, Pedersen said.

Both companies will continue to work with other players in their respective fields – Alcatel-Lucent with IT players such as Cisco Systems and IBM, and HP with Ericsson and Nokia Siemens Networks, among others.

“In enterprise, we have an agnostic approach in call center, in unified communications, in IP telephony,” Burns said. “We realize [other vendors] have a presence, but what we want to do is find those opportunities where we can and attack those opportunities.”