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Despite facing some tough challenges at the corporate level, Canadian communications and network specialist Nortel remains upbeat about its enterprise and telecoms business in the Middle East. Francois Lancon, president of Nortel's enterprise business in EMEA and Asia, tells CommsMEA how his company is working with its clients to boost efficiency during the downturn.

What are the main challenges for your enterprise customers in the region?

The enterprise management challenge is largely psychological in that as bad as people think everything is, with all the doom and gloom, markets are not as depressed as people think. If you look at the evolution taking place in telecoms technology, a lot of companies are making investments in communications and there is a lot of talk about unified communications.

There is a transition from traditional communications to unified communications. However, companies are not leveraging the investments that they have already made.

The challenge in this region is that a lot of education needs to take place in terms of the benefits of unified communications.

There are also different challenges in different verticals. For example, the challenges in healthcare are very different from the challenges in the travel industry. Fortunately at Nortel, we can offer a wide range of different solutions and adjust our product portfolio to the new economic challenges, and some of our industry specific solutions are helping us maintain relevance amid the economic challenges affecting most industries.

What are the biggest changes happening in the enterprise and telecoms space at the moment?

If you look at pure wireless, it is now very commoditised. It you look at it from a strategic focus, with hardware becoming more and more a commodity, if you are a telecom operator looking to reduce costs, the market for hardware effectively follows the supermarket model.

However, telecom operators in the Middle East are past that phase and close to maturity. So for Nortel, the application space has more potential, and we are increasingly looking at customer care and retention and how our customers can improve their churn rate. Companies need to differentiate on customer service to reduce churn, and then look at new services, such as fixed mobile convergence and triple play.

What are Nortel's technological strengths?

In terms of pure technology we are going to keep a focus on some technology such as our CDMA evolution, optical networks, fixed-mobile convergence, and contact centre applications. We are also a leader in VoIP.

Telecom operators in the region are moving towards maturity and so customers that were spending on hardware are now spending on software. While Nortel's pure software business is a low percentage of overall business, much enterprise business is based on software. We have made a huge shift from an offering based on hardware to one based on software.

Many of our customers face a challenge integrating technology and platforms from different vendors. There is a need for layers that run across all those platforms. If a company is buying from vendor A or B, the applications are now more and more standardised. We can create software for multi vendor platforms.

This is useful for integrating multi vendor teleconferencing systems for example. Also, with so much M&A activity taking place recently, many companies have found they are using a lot of different technologies.

They don't need to change all of their phone systems, but they might need to bring them together, integrate them better. In the Middle East there are big opportunities around services. It's not just about having the right software - services and solutions go together. Our transition into solutions and applications represents a huge opportunity and a huge challenge.

How do you see the rest of the year developing?

In the second quarter, people will still be on the edge, while in the third quarter we will see a bit of renewed spending, with people regaining a cautious level of confidence. People are going to wait another 60 to 90 days to see if things get better.

IT is depressed because people are not replacing networks, they are looking at upgrading. There is a lot of stickiness. People will keep replacing their systems one part at a time. I don't think we will see a big turnaround in the second quarter. We are starting to see customer confidence return in the US, and if that continues, people in the Middle East will follow, although Europe will stay cautious for longer.

How has business been since nortel filed for bankruptcy protection?

The business has had issues. The company accumulated a lot of debt and went into Chapter 11 bankruptcy protection, but despite that we have a set of sound businesses, and while we can't predict the final outcome, business has been holding up well.

Business in the Middle East is doing well. We expect to see an increase in the second half of the year. We have been having some deep conversations with our customers and we have had a rise in customer contracts in the past 90 days. We have also just opened an executive briefing centre in Dubai. The Middle East and India are two focus regions, and this is where I am putting most investment and people.

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