New Business Models

New Business Models

Technology business models are evolving for vendors and customers alike

Technology has long been a capital expense investment with a business value that often resembles a bell-curve over the period of functional life. As new technologies are introduced in a CAPEX model, complexity and management costs also increase, affecting ITs total cost of operation. In contrast, consumption models are scalable, outcome focused and shift the burden of managing complexity to the vendor.
But the strategic consideration of consumption models and “the cloud” is not just about price. Price and cost of ownership are not the same as any economist will explain, and business value considers factors beyond direct ownership costs. While the acquisition cost of capital is tangible, and operational costs can be estimated, opportunity costs are often overlooked in cost analysis of technology capital investment.

We have developed a “new business models” strategy that simply allows a customer to change the way they buy their utility services of network, communications and collaboration and transition customers from being an owner of infrastructure assets to being a consumer of infrastructure services – much like electricity is consumed today.  Within this new business model, we have a range of primary services:

We’ve developed a model called Network on Demand (NoD) which enables customers to pay per utilized port – measured hourly, calculated daily and billed monthly. From a business perspective, what this means is that we are sharing the risk with our customers and partners, if the customers don’t use the network, they don’t pay.

When thinking about the vertical markets we have looked at how these businesses get judged by their boards, by their shareholders. If a venue (stadium, theatre, etc.) is measured by how many patrons they get through the turnstiles on a given day, why can’t we align with them so they only pay per user, per day.

Similarly, there are industries that have the potential to see completely unexpected but sustained growth in their measurable business outcomes. Health or aged care facilities, as well as, start-up businesses often find it hard to predict just how quickly they will grow. With NoD, just like compute and storage as-a-service, they can scale their cost, rapidly and efficiently, in line with their business.

Our goal is to carry over this way of thinking about the cloud and further shape our strategy across our range of technology offerings to help customers deliver a personalized connected experience to their employees and customers. Take our Open Touch Enterprise Cloud (OTEC) offering for example. Similar to NoD, OTEC is a unique consumption based OPEX unified communications model. It’s a true UCaaS platform that again enables customers to share their risk with a vendor. It’s a platform that has been witnessing strong successes, particularly in Australia where it has been utilized by many customers, one of them being the Accor Hotel Group. The major hotel chain aligns its business model with the Alcatel-Lucent Enterprise OTEC cloud offer so that it pays for telephony, only on a per-occupied room/per night basis.

This financial model meant that the risk on Accor’s side is virtually nil. Accor’s telephony costs will only increase when its revenue also increases. And similarly, when revenue decreases, cost reduces.

The next string in the bow of our cloud strategy is Alcatel-Lucent Enterprise Rainbow. Rainbow delivers collaborative team interactions as a borderless and free, cloud-based, mobile and desktop communications application that is installed with the click of a button. From a functional perspective it will encompass IM, presence, voice and video conversation. Rainbow will interoperate with a range of PABX vendors and thereby allow the customer to extend the life of their on-premise PABX infrastructure or as many CFOs say, “sweat the asset”.

We now have initiatives which align with our customers desire to purchase technology for business reasons, not technology reasons. We are working with our business partners and customers to embrace the commoditization of telephony, and of the network infrastructure.  We are partnering, not on a technological level, but on a business outcomes level and that is our key differentiator.

In essence, Alcatel-Lucent Enterprise’s strategy culminates in a mission to share the technology risk with our customers and partners. It’s our vision to ultimately change the way customers buy technology.

Adopt an IT model that adjusts to your needs