A cultural collision

In the last few months Alcatel-Lucent has raised more than a few eyebrows, announcing massive job cuts and seeing profits nosedive. Eliott Beer attended the company’s annual Enterprise Forum to find out how it planned to address growing concern in the industry.

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By  Eliott Beer Published  March 8, 2007

In the last few months Alcatel-Lucent has raised more than a few eyebrows, announcing massive job cuts and seeing profits nosedive. Eliott Beer attended the company’s annual Enterprise Forum to find out how it planned to address growing concern in the industry.

Honeymoons are a tricky time — some appear to last for years, others for a few scant weeks, before reality kicks in and the fault-finding starts.

For Alcatel-Lucent, it almost seemed like the honeymoon was over before it began, with the merger of two of the telecom infrastructure industry’s biggest players long troubled by questions and criticism. This year’s reports of widespread shareholder dissatisfaction, job cuts and a US$813million net loss for the last quarter of 2006 seemed to take off any remaining shine.

By the time Alcatel-Lucent’s annual Enterprise Forum rolled around last month it was clear the company had plenty of work to do to silence at least some of its growing numbers of critics.

The four-day event, in front of press, partners and customers, gave it a chance to do just that — its main session, appropriately, fell on Valentine’s Day, as the vendor aimed to recapture the spark in its relationships.

However, CEO Patricia Russo’s presentation was very far from starry-eyed, as she gave a largely realistic assessment of the company’s place in the market, as well as its aims for the immediate future.

“I’m well aware that in the broader market we have some formidable competitors — I’m well aware that we may not always be the first company that comes to mind when you think about enterprise solutions,” she said.

“Frankly, I view that as a terrific opportunity for us — we grew our enterprise business by 15% last year, and we believe the merger allows us to bring a unique approach, as we merge our assets and capabilities to serve your needs and the whole enterprise market.”

While acknowledging that the merger had generated “some uncertainty” Russo said the company was “progressing well” with its integration plan.

“I also want to be very clear in conveying there is something about which there is no uncertainty in my perspective — that is our commitment to and the importance for us of our entire enterprise business and the enterprise market,” she stated.

To make its point about the significance of the enterprise market, Alcatel-Lucent brought in one of its most high-profile global customers, in the shape of Dan Drawbaugh, CIO of the University of Pittsburgh Medical Centre (UPMC) in the US.

UPMC is an ambitious global player in healthcare, with operations and partnerships around the world, including in Qatar where UPMC has partnered with local health authorities to offer its expertise in emergency medicine.

“A key way for us to create growth in our organisation is by strategically selecting partners for investment in commercialisation — this is a very thoughtful process, and very strategic to us,” said Drawbaugh in his presentation.

“Right now, we have selected five companies that we consider strategic: you can see Alcatel-Lucent at the top of that list. It is one of the most important relationships for us going forward, with the trends of convergence of voice and data, and now the video requirements within the healthcare sector,” explained Drawbaugh.

The vendor continued its market segmentation strategy in its product expo — visitors could explore sample set-ups for industries including hospitality, government, and of course healthcare.

Alcatel-Lucent also offered up specific products for small and medium-sized businesses (SMBs), alongside its well-established high-end enterprise ranges.

How successful this is in the long-term remains to be seen — much of the criticism around the merged Alcatel-Lucent focused on the clash of corporate cultures.

Alcatel-Lucent is definitely putting in the effort in its relationships, with customers, partners, and not least the vestiges of Alcatel and Lucent.

The vendor closed its Enterprise Forum presentations on a song — almost a serenade to the joys of new business generation. But with the honeymoon quite definitely over, Alcatel-Lucent is now getting down to a lot of hard work.

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