The new Nokia is placing its bets on cloud and CEM
Clare McCarthy, Practice Leader, Telco IT
Nokia held its fifth analyst event in advance of the TM Forum’s Management World (TMF Live!) in Nice. After six years under the NSN banner, the company did not hesitate to return to a Nokia brand that fronts a networks business. The “new Nokia” comprises three business units:
- Nokia Networks includes all of its core and radio access network solutions, as well as its customer experience management (CEM) and OSS solutions and services – basically the whole of the former NSN business, which accounts for 90% of new Nokia’s business.
- The business unit Here accounts for Nokia’s mapping arms, including the Navtec acquisition, and accounts for around 7% of revenues.
- Technologies comprises all of Nokia’s patents, including some from its device heritage, and accounts for 3% of revenues.
Objectives for the “new Nokia”
Nokia’s services business, which is included in the Nokia Networks business unit, accounts for approximately 50% of the company’s overall business, and is central to the company’s positioning. When NSN divested its BSS and fixed line assets, it presented itself as “a product company with services attached,” and exited several unprofitable contracts. However, at Nokia’s analyst event this year, the company highlighted:
- telco cloud
- CEM and OSS
- its Intelligent Self-Organizing Networks (iSON) framework that underpins its automation of business processes and self-configuration, self-optimization, and self-healing use cases.
Nokia’s story is a familiar one of a NEP transforming into an ICT provider, albeit more narrowly focussed on the mobile broadband (MBB) world than its peers, and lacking a BSS portfolio. As a result, partner outreach was also more explicitly stated this year. However, the company also used the event to restate its claim to be the first NEP to decouple the hardware from the software.
Nokia offers a network cloud (the cloud that telcos use to run their networks), and runs an IT cloud to support telco IT such as OSS, customer experience management (CEM), and big data analytics (BDA). While it will undertake network orchestration in the Nokia Cloud, it will use partners for service orchestration. For example, it has extended its router relationship with Juniper to include SDN, and broadened its relationship with HP to include computer platforms to support its distributed network function virtualization (NFV) deployments.
Nokia’s CEM presentations provided an update on its mature offerings in this area. Nokia’s CEM proposition is tied to service assurance and includes BDA, and it expects to have 42 more live customers in 2014. One of Nokia’s Central European telco customers spoke positively about the CEM project undertaken by Nokia, which delivered above expectations on network capex optimization and realtime service and quality of experience (QoE) monitoring.
However, the key challenge over the next few years for CEM is in assuring and monetizing the Internet of Things (IoT) ecosystem, specifically the machine to machine environment.
The IoT presents telcos and their vendor suppliers with a huge variable in the QoE equation. Nokia has all the right things to say about automation of processes triggered by alarms and closed loop diagnostics, and the right mindset and approach with its predictive operations offering.
QoE should not be a remedial and reactive measure; it should incentivize telcos to prevent issues before they occur. Nokia claims +95% accuracy for its predictive network operations solution, which allows telcos to forecast network and service degradation up to 48 hours before it affects subscribers.
Professional service opportunities
Nokia is not a sentimental company and it will make the hard decisions. While arguably it has become a niche player in the network arena, it still has a strong MBB play, having decoupled its hardware and software layers and extended further into software tools and capabilities. It could be an attractive partner in the telecoms vertical, especially for enterprise software companies that lack telecoms industry insights.
Nokia’s CEM Umbrella Solutions and CEM Service Suite will strengthen its professional services position, and as Nokia embraces the ICT play, the importance of its consulting and system integration capabilities cannot be overlooked. CEM projects do not sit neatly in one department of a telco; they cut across multiple departments, domains, and responsibilities, and strong project management and governance is a prerequisite for these projects to succeed.
Nokia will be competing against telcos themselves as well as its traditional NEP peers – IBM, Wipro, and others. Nokia needs to continue to demonstrate its credentials and business process skills in this field.
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