Keeping ahead

CommsMEA spoke to BT’s Mike Galvin and EMC’s Bill Teuber about how their businesses utilise new ideas for the broadband and storage sector, and how they will impact the telecom sector.

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Keeping ahead Bill Teuber says EMC expects to spend US$2 billion on research in 2010.
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By  George Bevir Published  April 5, 2010 Communications Middle East & Africa Logo

There are a host of ways to bring new ideas to market and monetise them, from internal research and development teams creating new products and services, to working with small start-ups tightly focused on a particular area, through to the acquisition of fully-fledged firms that might offer a product or service that has a natural overlap with the business.

Innovation lies at the heart of the most successful firms in the telecom and technology sector, and however it is harnessed it is an essential component of a high-achieving business. But the recent global economic turmoil has caused businesses to reappraise all aspects of their operations, throwing a spotlight on the role that R&D plays.

Mike Galvin, BT’s managing director of Research, 21C Customer Experience and Technology Strategy, says that he expects research to undergo a lot of changes over the next few years. “The old idea where we had a corporate research department is rapidly receding and you can see that globally. My aim is to modernise what we do, be more global in taking in new ideas and to make sure that research is plugged in to every stage of the innovation chain.”

One way to make sure that happens is to ensure that adequate funds are channelled into the right areas. Although there may be a temptation to cut back on areas like R&D that don’t show an immediate benefit, the impact is likely to be felt once companies emerge from the downturn, and those that have maintained levels of investment could see themselves pull ahead of competitors.

EMC claims that its “differentiated value” comes from sustained and substantial investment in R&D. It says it has “thousands” of technical R&D employees around the world, and according to vice chairman Bill Teuber investment in research and development is essential for the further development of the company.

Teuber says there has been “sustained” R&D investment over the past few years. In 2008 it stood at $1.7 billion, which dipped slightly to $1.6 billion last year, but it is expected to reach $2 billion this year. Indeed, spending on research and development reflects Teuber’s belief that “2010 will be a better year than 2009”.

Future investment

Teuber says that although information storage is where the EMC business “grew up”, a few years ago the management team at the US-based firm decided it was not enough. “We saw how important virtualisation was going to be, and so we bought Vmware for US$600 million in 2004.  For Teuber, the financial results are proof that the move was the right one. “At the time, it was doing $800 million in revenue, and then last year it did $2 billion,” he says.

EMC has stuck with its acquisitive approach to innovation, and last year it bought Data Domain, a firm that specialises in data deduplication technology, allowing users just to store things once. “It compresses tremendously the amount of information that has to be stored,” says Teuber.

Involving customers

BT’s Galvin expects customers and clients to get more involved in research than they ever have done before, primarily because it is now easier to be in contact with people who might be geographically dispersed.

“At one end of the scale it’s about involving customers; asking them questions, sharing ideas with them and working together on projects, sometimes quite informally,” says Galvin. “At the other end of the scale it is actually using customers to help with pilots and trials. There are a range of options in the middle that go around understanding the business problems that other people have, and looking at what research questions they are trying to solve and working collaboratively like that.”

He says that under the “old model” the process would start with a question, followed by research. Now, the starting point might instead be to go to the customer and ask them about their needs.

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