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Come
April 1 convergence will be the name of the game, and many
companies are going all out in this battle to get a chunk
of the market. One of the first movers in this space is Tata
Telecom, which has undergone a massive restructuring exercise
in an effort to target the segment more effectively. Shipra
Arora profiles the company and tries to find out what
tricks it has up its sleeve
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| Mehta
is bullish on the convergence game and believes the company
has all it takes to emerge a winner |
With
convergence emerging as a hot new opportunity for India Inc,
many companies are devising ways and means to make the most
of this opportunity. Leading the pack is the Rs 233.7 crore
Tata Telecom (an equity joint venture between Tata and Avaya),
which has transformed itself from a ‘voice company’
to a ‘total business communications solutions provider’.
Says Niru Mehta, vice chairman, Tata Telecom, “As Internet
communication, VPNs, CRM solutions and voice and data networking
solutions make applications such as tele-medicine and distance
learning a reality, convergence will have an important role
to play in changing the way business is done. We are at the
forefront in this race and will have a pivotal role to play
in redefining communication.” For those who doubt the
resolve of the company, the fact that it plans to touch the
Rs 500 crore mark in another 2-3 years, should be evidence
enough of its determination.
While to most the move may have come as a surprise, for the
company it has been a well planned effort, something which
it had been planning for over the last two years. Says Mehta,
“In order to position ourselves as the leader in the
market, we have been creating competencies in this space for
two years now. Strategic transformations and restructuring
of our processes have all been part of this effort to move
up the value chain.”
Even though the company boasts of growth rates in the 25-30
percent range while the telecom industry in general has been
witnessing a mere 16 percent, the move is also being seen
as an effort to tide over the slowdown.
Product strategy
The
most critical and strategic transformation has been the company’s
product strategy. Commenting on this, Mehta points out that
the company’s strength till date has essentially been
in the voice communication and messaging solutions space,
with almost 1.5 million EPABX installed ports and around 60
percent of the call centre market to boot. However, the focus
is now on data networking, Unified Messaging, VoIP and video
conferencing capabilities, with the expansion in its product
portfolio over the next two years to be largely in these categories.
As the first step in the expansion of its product line, the
company recently launched Data Networking Avaya MSNI solutions
(Avaya Multiservice Networking Infrastructure solutions),
which are capable of voice, video and data transmission. “With
the business enterprise space undergoing rapid changes, our
aim is to help enterprises meet the challenges of building
a new generation of network architectures that cost-effectively
integrate voice and data on a single infrastructure,”
explains Mehta.
The company’s solutions’ revenue mix is now poised
for a rapid change over the next 1-2 years with it putting
increased emphasis on its non-voice solutions line. According
to Mehta, the company hopes to earn at least 30-40 percent
of its revenues from this space with the rest coming in from
voice solutions. He says, “Most of our revenues will
accrue from high-end fully convergent solutions.”
Market share has held the key to victory in many a battle
and this is exactly what the company plans to get in the next
few months. It has already chalked out plans to capture 30-40
percent of the Unified Messaging space and 10 percent of the
Data Networking space. Mehta adds that these plans will not
be confined to merely the drawing boards and will be put into
effect soon. For instance, in the VoIP and Unified Messaging
space, it has drawn up a strategy leveraging its huge installed
base in the voice space. Tata Telecom today provides services
across four broad areas:
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Business Communication Solutions:
The Definity range of solutions offers a flexible and scalable
platform that supports a variety of applications such as
customer sales and service, conferencing, collaboration,
and mobility and distributed workforce.
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Data Networking:
The Cajun range of solutions takes LAN and WAN capabilities
to new levels. With a wide range of switches, it provides
a wide range of solutions to meet the unique needs of customers.
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Call Centre Solutions: Tata Telecom’s open platform
solutions allow businesses to leverage their resources for
automating, integrating and managing them, thus enabling
peak performance, thus making them more responsive to their
customers by meeting their needs consistently and ultimately
ensuring customer loyalty.
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Voice Mail and Teleconferencing Systems:
There are a wide range of voice mail systems that integrate
fully with PBX, have high traffic handling capabilities
and come with reliable software and hardware.
According to Mehta, the key element in all these solutions
is reducing communication costs while at the same time increasing
efficiency. “Moreover, by implementing customised solutions,
organisations can effortlessly manage all information requirements,”
he adds. No surprise then that Tata Telecom currently boasts
of a clientele that includes industry leaders such as Citibank,
Reliance, GE, Taj Group of Hotels, ABN Amro, Enron and British
Airways.
According to Mehta, customers are now moving beyond plug and
play solutions which required direct business development,
towards more customised offerings catering to their specific
needs. “It is here that our new business focus will come
into play as this will allow us to provide complete end-to-end
solutions. To play a major role in the convergence space it
is going to be very critical for Tata Telecom to strengthen
its presence in the indirect business space,” he adds.
Under indirect business, the company is looking at establishing
and strengthening its relationships with large systems integrators
and value-added resellers, which includes the likes of IBM
and NIIT.
Even as the company expects a bulk of its sales to come from
direct business, the growth will be highest in terms of indirect
and new businesses with almost 100 and 200 percent growth
respectively. However, as Mehta points out, the most significant
factor will be the stupendous momentum that these two will
give to the overall growth equation of the company’s
revenues. While revenues from businesses like professional
services and high-end application development themselves are
not expected to be very high in terms of overall revenue mix,
they will play a catalytic role in terms of getting the company
a bulk of its businesses. “This will be because of the
‘differentiating factor’ advantage that it will
give Tata Telecom. In the convergence space, as you move higher
up the value chain where communication solutions are designed
towards being a business accelerator and finally ‘the
business’ as opposed to being mere tools to reduce costs,
things like cost-competitiveness and technology cease to be
the differentiating element. It is then the ability of the
vendor to deliver complete end-to-end solutions adjusted to
all their requirements as well as the ability to ensure the
smooth delivery of all the mission critical applications that
becomes the key differentiating factor,” he says. He
adds that while currently, customers might not be very willing
to pay for the value-added professional services and high-end
applications development, two years down the line, when communication
solutions become ‘the business’ for them, this market
space will pick up, and the company wants to be prepared for
it in advance.
Another very important strategic change geared towards the
new identity of being an end-to-end solutions company has
been the complete re-engineering of its business processes
from the operational excellence model to customer responsiveness
model in the last two years. “This decision of completely
over-hauling our business processes was necessary because
the operational excellence model focussed on providing basic
vanilla solutions at the right price. As opposed to this,
the customer responsiveness model helps in addressing the
exact needs of the customers, which helps deliver complete
solutions the mantra for success in convergence age. This
will effectively help us gain an edge over our competitors,”
explains Mehta.
He adds that though manufacturing was earlier the core focus
of the company, it had to shift focus in order to keep pace
with changing times. Accordingly the customer responsiveness
model evolved, with a transformation from a functional to
an account-centric organisation with a greater emphasis on
the provision of end-to-end solutions. The company has even
gone to the extent of re-designing its basic services offerings
in terms of categorising the various levels of service offerings,
namely services for ‘basic applications’, ‘business
accelerator applications’ and ‘mission critical
applications’ to ensure that different requirements are
met more efficiently. Also in place are the company’s
plans for enhancement of its infrastructure set-up including
ERP implementation over the next two years with investments
of Rs 10.5 crore. In terms of marketing, the company has now
outlined a more direct customer engagement marketing mode
through seminars, etc, to build their confidence in its capabilities
to address their needs as opposed to the awareness campaigns
kind of marketing mode.
While the company continues to evolve strategies and prepare
itself for the convergence game to align itself with the e-economy,
the focus remains on playing it smart. This can be gauged
from the fact that despite the complete overhauling of its
core values and business processes, there is going to be no
significant increase in the company’s overall investments.
“The investment figure will remain more or less constant.
It is the investment mix which will change significantly,”
explains Mehta. For instance, the company is directing many
of its manufacturing investments into building up its end-to-end
solution competencies, which effectively results in building
up customer-centric capabilities.
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