EDS Anywhere? Part II
June 2007
With all of Yankee Group's mental horsepower these days focused on Anywhere—the emergence and implications of ubiquitous connectivity—when I had a chance to sit down recently with two of EDS’s top executives, that’s what I wanted to talk about. For highlights from my conversation with Charlie Feld, Senior EVP for Applications Services and a member of the EDS executive committee, look here.
What follows here are some excerpted remarks with Dennis Stolkey, Vice President, US Communications, Global Network, and EDS Bank of America, plus some endnotes from me and few Yankee Group colleagues.
Emily Green: What do you think of YG's vision of a network future that's seamless, high-capacity, and highly intelligent -- what we call the Anywhere Network?
Dennis Stolkey: We're aligned with it. At EDS, we also talk about how our network has to be available now. Your philosophy is "anywhere," ours is "now"—I think they go together.
In 1999 we gave up owning a network ourselves and outsourced that to a major carrier. In 2004 we decided to invest in and run our own global services network for connecting clients to our sites.
So the Anywhere Network future that YG foresees won't necessarily come from a traditional network operator, but potentially from a systems integrator like EDS. Why do you have to do it yourselves?
With increasing needs for virtualization, off-shoring anywhere, mobility, and imaging we felt it important to build and own our own. Global enterprises worldwide require a very flexible, all-IP network. Today's off-shoring game is in India, but things are moving very fast around the world; tomorrow it may be China. You don't know where you're going to need your network next. We have to have a network that can anticipate that.
That's Anywhere thinking. What are the challenges for EDS in doing that?
Well, when you outsource, you give up talent; when we outsourced our network operations in '99, we lost much of the in-house carrier-grade skills associated with building and running a network, which we first had to replace when we changed approaches. You also need the right tools; we had to design our own software to manage our network to the standards we designed.
Providing enterprises with an Anywhere Network, and the managed services to use it, is an opportunity targeted both by operators and global system integrators. The operators see their intrinsic network skills as their big advantage over an EDS. Your take?
Operators are product-centric; it's hard for them to convert to the service mentality that rules the enterprise. And larger enterprise clients are dealing with multiple operators, and appreciate a partner in services who is agnostic in that environment.
Who's doing it best in the world of network operators?
I'm impressed with BT and their vision. And in the U.S. market, Verizon is very focused both on fiber and on shifting their business model. AT&T is well-positioned.
Do network operators know the network better?
When issues arise within their own networks, they're the best at resolving them. But when issues span multiple networks, resolution times rise to 4 to 8 times those of single-network problems. That just doesn't work for the enterprise customer.
We have concentrated heavily on reducing network outages for our clients. I've been approached by two separate network operators recently who said, "Maybe you should manage our network for us." I actually don't think I'll see that happen in my lifetime; if you're an operator, how would you explain to your customer that you'd given the job of running your core asset to someone else? But it's pretty interesting that they're not sure that they can do it better than EDS can.
Let's talk about your clients. Charlie Feld says they're 20th-century businesses that have to transition to 21st-century models. Given the evolution of the network environment around them, are they moving fast enough to mobilize?
No; but I understand why, since we have the same issues on our own campus that our clients have. Telephony equipment we have now include workhorses which just keep going and going; for instance we have an SL-100 (telephone switch) on a campus that we installed in 1991.
I'm sure the equipment providers would love to see us replace that with IP telephony. And for greenfield situations for our clients, we certainly think IP telephony and other solutions are the right way to go. But for brownfield environments, most of us just aren't ready to write off the gear we've got. At some point, that stuff will become un-maintainable—but that could be 5 to 7 years from now.
The other challenge for enterprises in this area is the value proposition. Sure, if I install IP telephony I get moves/adds/changes for free, but the business values aren't as clear as they should be. Put simply, the enterprise asks, "How does this help us sell more shoes?" The compelling answer is not there yet.
Over the last few decades, bandwidth and demand for bandwidth seem to change places periodically, with each one chasing the other by turns. Right now, do the people you talk with wonder about the need for capacity in the network?
When we built the EDS network, a couple of our engineers said that we were building too much capacity into it: that it would take more than 30 years to grow into what we'd built. Two months after I took responsibility for that network, the same engineers came to me to say, "We’ll be out of capacity in two months if we don’t do something." It's things like imaging that can really soak up bandwidth. Fortunately we had the architecture that made it easy to upgrade the backbone.
The really interesting question is, how much bandwidth can we get out of thin air? Can we get 25 Mbps, 50Mbps, over the air? That would change a lot of things.
If we can, then say goodbye to the "F" in Fixed-Mobile Convergence—who'll care about fixed infrastructure? Given that, what's your take on WiMAX—the so-called fourth generation of mobile technology?
I'm… (long pause)… not sure about its future. I think it might not happen. (Most) operators don't want it; they may succeed in killing it off.
Endnote:
Inveterate analyst that I am, I talked later with Yankee Group's Zeus Kerravala and Phil Marshall about Dennis' observations. Here's a peek at some reactions of theirs that I found interesting:
Zeus Kerravala: Two main things struck me about Dennis's remarks in the context of the work Yankee Group does with enterprise mobility strategies. First, your question about enterprise mobilization became a 2003-era discussion of IP telephony. But it's not just a replacement for current voice systems. All of the IPT vendors have kicked the message up a few notches to unified communications and the integration of voice services into business process. I'd have been citing the IP telephony ROI case studies that I know EDS has experience with. He also didn't address mobility applications at all.
Second, the EDS network is focused on enabling BPO to whatever emerging countries are appropriate. But he's doubtful about WiMAX. That's a contradiction to me because emerging countries are where WiMAX fits well. If off-shoring moves to some other country that doesn't have a strong enough fixed-line infrastructure to support it, WiMAX may be the way to build the missing infrastructure. It's only in the more developed markets that some current wireless operators hope it doesn't fly since it threatens their 3G investments.
Phil Marshall: In reality, EDS has the same issue as the traditional telco; in many cases EDS must deal with multiple other operators (particularly as we see increased convergence in access technologies). If a telco is trying to be a network operator, then it makes sense for them to maintain control over the network. However, if it's positioning itself as a service provider, then I don't think it is necessarily a requirement to continue managing the network itself.
I'm with Zeus on Dennis' discussion of IP telephony. On the one hand, he says enterprises should move more quickly to mobility. On the other hand, he is saying they have no compelling reason to do so. He should have mentioned the numerous leading applications and drivers for adoption to help their clients get there.
Dennis Stolkey is responsible for all communications services within EDS, including portfolio, engineering and delivery. He sometimes wonders what the rapidly expanding wireless bit traffic might be doing to our brains. And when you go to China for business, he doesn't recommend jellyfish tentacles J.