It can be hard to put a finger on what NTT Group does, exactly*.
On the one hand, over a third of the world’s internet traffic flows through its infrastructure and it’s the third largest data centre provider in the world.
On the other, it’s busy making VR headsets and haptic suits for Australian firemen to help them train for forest fires, creating eerie holographic representations of traditional Japanese dancers, and spending $3.6 billion on R&D annually to come up with more left-field technological innovations than you can shake a stick at.
The Japanese telecommunications leviathan (and telecommunications is at the heart of its capabilities) has 17,000 patents to its name; second only to IBM in the technology world, and the portfolio of companies under its large wing spans cybersecurity, consulting, IT support, cloud migrations and much more. With such diversity, comes the risk of deep inefficiency however, and NTT’s leaders want change.
The most prominent manifestation of their bid to drive efficiencies, improve margins and ramp up cross-selling was the July launch of NTT Ltd. The new London-based holding company consists of 31 NTT brands, including Dimension Data, NTT Security and WhiteHat Security.** It is now four months into a concerted push to trim out bloat, invest in the higher margin opportunities, and rationalise its go-to-market approach.
Former Dimension Data CEO Jason Goodall is in charge. As NTT Ltd CEO, the loqacious South African talks engagingly frankly of the challenges.
As he sees it, the job of melding 31 companies and 40,000+ people into a single, streamlined, $11 billion business needs to be tackled with the kind of disruptive aggression a startup would bring to the table (“I’m a big fan of small, under-resourced teams,” he half jokes). That process is well underway and it’s all action…
*In 1985, voice related revenues accounted for more than 80 percent NTT Group revenues. It’s now less than 20 percent. IP/packet communications services revenue and system integration services revenue account for over 60 percent. Global sales account for approximately 20 percent of overall group revenues. There’s room for growth.
“Every Quote Was Bespoke”
Sitting down with Computer Business Review, he fleshes out his thinking on the cross-selling opportunities opening up, and the ongoing internal work on how products are sold: “Fifteen, 20 years ago, we were one of the first system integrators to go into services. But we allowed all regions and countries to break out and do the same thing.”
Almost every quote, in short, was bespoke; an expensive and time-consuming process that scales poorly. As Goodall puts it: “One client says ‘I want six hour meantime to respond; 12 hour meantime to repair and all my assets managed 24/7’.
The next client says: ‘I need a two hour meantime to respond, four hours to repair; and I don’t need all of my assets managed, just 60 percent’… you can imagine. And then you sprawl this… Now we have four basic services, from very basic support to more sophisticated, with add-ons like quarterly software audits of your infrastructure. So it’s four basic services; bronze to platinum as it were, with 10 add-ons.
“We’re taking a similar approach to our Security Operations Centres (SOCs): we have 10 and probably only need four. There are still data privacy issues in some cases around security, so we’ve got to go through that process. But because we started to automate a lot of the processes that support the platform, we are now able to centralise a lot of that delivery into fewer places.We think it’s about four. It might be three. It might be five. But it’s the same policy template mindset; making all of our managed services very simple and very defined: ‘This is what you get. That’s the price. This is the SLA’.
NTT Ltd Cross-Selling Opportunities: “Now we have our own data centres!”
NTT sees one of its key competitive advantages as its full-stack capabilities, from applications to IT infrastructure, via networking and data centres.
But, as Jun Sawada, President and CEO of NTT Corporation (the Japanese parent company of NTT Ltd) puts it in the company’s annual report: “The Group has been unable to fully demonstrate its strengths due to confusion between different brands. Now, however, we have united the NTT brand and reorganized overlapping systems and products to start operations under NTT Ltd. as a global operating company.”
Can Goodall give a few examples of the cross-selling/up-selling opportunities?
“There’s two aspects to it. One’s the low-hanging fruit: say you have a data centre client. You’ve been supporting them, but know they currently buy all of their network equipment and data safety equipment from company ABC.
“Now we can knock on the door and say ‘by the way, we are now part of NTT Ltd.; we’re Cisco’s biggest partner, Dell’s biggest partner, EMC’s, VMware’s, whoever. Can we have an opportunity to quote next time you do a procurement?’ Although that’s the simplest level, it scales nicely across the business.
“But then we can also say ‘we understand that you’re looking at the benefits of having a programmable network?’ ‘So you want to overlay a software defined, managed WAN on top of telco infrastructure to get a global solution?’ In the past, as Dimension Data, we could absolutely do the software-defined part, and have our own management layer. But we didn’t own any of the infrastructure underneath so we’d have to go and phone AT&T in America, BT in the UK, whoever; we’d have to try and understand the underlying infrastructure to put all all of our layer on top of it.
“Now we can say ‘we have our own network [through NTT Communications] in 190 countries around the world. I wouldn’t say every single local loop, but we’ve probably got 70 percent coverage on our own infrastructure. That makes it so much easier to control the underlying cost base.
Again, someone in the past like a bank wanting to adopt a hybrid strategy might have come to us for a migration, but we’d have to call someone else for the data centres. Now we have our own data centres!”
So there’s a whole lot of stuff we can start bringing together, like when we’re supporting someone migrate their applications off-premises, we can introduce our application security offering, via WhiteHat. Overall, we have so much more control over the whole supply chain, and we can start training our sales teams, which is an ongoing journey.”
How important will consulting be to this process? “We don’t want to be a Bain”, Goodall says. “Consulting is painful. We’re not trying to run our consulting as a as a profitable business. We run our consulting as a business to pull through other opportunities.”
One of the company’s other focuses is trying to make sure more of the innovations coming out of a well-resourced R&D team in Japan make it onto customers’ radars. As Goodall puts it: “The boss is putting a lot of pressure on R&D to make it more relevant. That’s the push. From the pull side, we’re bringing out clients into the heart of the R&D centre to see what’s happening and building our own client innovation centres: the first in Sydney last year, and one in Brussels coming up.”
Two that excite him: the company’s FLAIM project, which is an immersive, virtual reality (VR) firefighter training simulator that incorporates a patented digital biosensing fabric developed by NTT called hitoe. This provides real-time data readings of biomedical signals, for example, electrocardiogram or electromyogram signals.
As Goodall puts it: “It’s so realistic. You can see the fire moving quickly. Then your suit starts to actually heat up as if you’re in a fire. You’ve got to use your hose to try and put out the fire, but pulling the hose yields real pressure. I’m a relatively fit guy but you very rapidly lose sight of the fact that you’re just standing in a room. Another innovation we’ve been excited by is Kirari. There are fewer traditional Japanese dancers being trained, so this augments their performances with holograms; it can be hard to tell what’s real. Imagine what you can do with this technology: you could go to a physical stadium and have a real-time mirror of a Spurs game, in Asia.”
New technologies aside, what of the nearer-term implications of the merger? How many heads will roll? “We don’t have a VC model of ‘it’s 40,000 and it needs to be 30,000’ Goodall says. “There may be a slight reduction in headcount overall as we streamline shared service and automate. But then there’s definite headcount that we need that we don’t have, which is around consulting, around go-to-market and so on. It’s more about making a shift in what those heads are doing.”
**28 at launch, with three since added through acquisitions. At launch these were:
Arkadin, APSiDE,Communications Lifecycle Management (CLM), Dimension Data, DPA, DTSI Group, Emerio, e-shelter, Euricom, e2y, Global IP Network (GIN), Gyron, Netmagic Solutions, NTT Communications, NTT Communications Cloud Infrastructure Services (NTT Com CIS), NTT Communications Managed Services, NTT Global Networks, NTT Indonesia Nexcenter (NTTI Nexcenter), NTT Security, Oakton, RagingWire, Secure-24, SQL Services, Symmetry, Training Partners, Transatel, Viiew, WhiteHat Security