Yesterday's WSJ report that Alcatel-Lucent is looking at options for divesting itself of the enterprise unit isn’t a big shocker. Since he assumed the mantle of leadership in 2008, ALU's CEO Ben Verwaayen has rarely been known to wax poetic about the advantages of a combined carrier/enterprise business. This in contrast to the earlier CEO (Lucent's Pat Russo), who talked about it often enough, but never made it happen.
Since Alcatel-Lucent is understandably not discussing merger and acquisition plans with journalists and analysts, we are left with what-if exercises. For my take on the news, I've tried to put myself in the shoes of the executive that has been the face of ALU-E for over 10 years. In that time, it has been Tom Burns, President of Enterprise and Strategic Industries organization that has headed Alcatel-Lucent’s enterprise business. An executive with the company since 1999 (when Alcatel acquired data company Xylan), Burns is the most senior executive completely dedicated to the Enterprise business. (Paul Segre, former CEO of Genesys, now heads an Applications Group that combines a carrier and enterprise focus.)
If I were Burns, which of the many alternatives (IPO, private equity, acquisition/merger with existing player like Avaya, Siemens or Cisco, or some other acquiring company) would I want for the organization I have spent 12 years leading? Yesterday No Jitter editor Eric Krapf cast his vote for IBM. In the same article, he dismissed HP as a possible candidate, pointing to them "killing" the 3Com product line. To me, the de-commissioning of 3Com development becomes a reason that Alcatel-Lucent Enteprise would be attractive to HP – but not the primary one.
1. HP and ALU-Enteprise have had sales success together: In mid-2009, HP and Alcatel-Lucent signed a 10 year alliance deal. In January 2010, Tom Burns added a VP for the HP Strategic Alliance to his executive team, Christel Heydemann. A vivacious young French executive who moved to California to be close to her alliance partner, Heydemann has delivered a level of sales success that Burns has repeatedly highlighted in analyst meetings for the last year. While other enterprise communications vendors have alliances with HP, nowhere else have I seen executives touting the sales success of the deals so pointedly.
2. HP and ALU-E share a vertical focus: While competitors talk about vertical solutions, I’ve seen a stronger focus on this product development and sales strategy at ALU-E than at competitors (the exception being Cisco, who also has a strong vertical approach). In verticals like healthcare and education, the companies have shared success.
3. HP Needs UC&C Applications to Continue to Compete with Cisco: Unlike 3Com, ALU-E brings some application jewels to the table, notably the Genesys suite. An application like Genesys' intelligent Workload Distribution (iwd) is a perfect fit with the consulting assets HP acquired with EDS.
The problem that HP would share with any entity deciding to take on ALU-E is managing the transition of the enterprise telephony base to a software-based model. But if I were Tom Burns, I'd like the challenge of doing this in company looking to expand footprint in a new line of business rather than at an existing player where it would more likely be a slash-for-efficiencies play.
