For Orange Business Services, the enterprise arm of French telco Orange, digital transformation is being guided by the changing needs of the multinational corporations it counts as customers.
The company, which has about 21,000 employees globally, has been a pioneer when it comes to software and virtualization, and plans to roll out a series of on-demand network offerings for customers later this year. Cybersecurity and the Internet of Things have also emerged as priorities for the operator as it expands its portfolio of services. (See Orange Ups Security Game as Threats Mount and Orange Plots Mass Network-as-a-Service Rollout.)
Telco Transformation spoke with CEO Thierry Bonhomme about digital transformation and how this is forcing Orange Business Services to evolve its modus operandi.
Telco Transformation: What does digital transformation mean to Orange Business Services?
Thierry Bonhomme: Orange Business Services is targeting only B2B customers and particularly the top 2,000 multinational corporations globally. We deliver connectivity as well as communications services that are related to the way our customers design collaborative tools for their employees and the relationship they have with their own customers.
There are two examples of what digital transformation means for two very specific customers. The first is AngloGold Ashanti, one of the leading companies in the mining industry, based in South Africa. They have more than 45 sites around the world and many are in remote areas where employees are isolated for long periods. So communications tools are critical. We provide worldwide connectivity across four continents and on top of the network we offer workspace capacity allowing employees to use their business applications. There is one, for example, provided by SAP -- a cloud-based service that sits on top of the connectivity services we provide.
A second smart-city example is what we have been deploying for a few months in the center of Doha in Qatar. That is being completely regenerated combining the power of digital transformation through the network, the service platform and the design of the applications for end users. We are the partner of this smart-city transformation within Doha.
When it comes to any digital transformation project, we start by raising some questions and issues with customers. First, do you know the end users within your project and what they are expecting and what are their constraints? That is critical. Second, there are many technologies but it's a combination that will contribute to any solution. Within Orange Business Services, we do not follow any particular religion and have the means for working on any technology.
Third, it's about the people. Yes, there are a lot of technologies but they need to work on a 24/7 basis and so we need an organization and staff that can operate everything. Sometimes this is like changing the engine of a plane while traveling over the sea, because the end user's needs change and the technologies are changing constantly. So we have an R&D innovation team within Orange that comprises about 5,000 people and has locations in all the big cities. We also have people with consulting capabilities to help answer customer questions. We have a subsidiary with more than 1,000 people in charge of cyberdefense and managing the end-to-end competences for security. And through Orange Applications for Business, we have about 3,000 applications developers for the mobile ecosystem and the ERP and traditional IT environment.
TT: What kind of partnership ecosystem does OBS need to build as it embraces virtualization?
TB: There are different aspects. The first is the innovation ecosystem where we have Orange Digital Ventures, a fund of about €100 million [$110 million]. We are investing €1 million [$1.1 million] to €3 million [$3.3 million] per case in small startups all across the world. We have one in the US specializing in blockchain, one in Europe working on the networks for IoT, one working on application as a service for retail companies. When it comes to open innovation, we have our R&D team interacting with the big vendors of this world, from Accenture and Capgemini to the likes of Hewlett Packard Enterprise, VMware, Cisco and Juniper. But we also have the capacity to understand the job of the operators, because that is part of our DNA. We have more than 900 operator partners across the globe, giving us landing capacity in 220 countries, and a physical presence in more than 180 countries.
For security, we've been operating a club of experts with expertise about the threats that are emerging. That allows us to be always on the competitive edge when it comes to cyberdefense. And in the cloud, we're part of an open community that's sharing versions of line code to be integrated on a continuous basis within our solutions. It's important to develop strong relationships with the small companies as well as the big animals of this world.
Is there an opportunity for OBS to compete with big cloud players or will they always play more of a partnership role?
That's clearly the co-opetition world. We have Microsoft, Google and Amazon as partners for some of our services but in other cases we are competing against them. We need to have this flexibility to understand the context in which we are interacting.
Next page: The SDN and NFV opportunity
The SDN and NFV opportunity
TT: As a company maintaining a lot of legacy infrastructure, how do you go about integrating SDN?
TB: There are many interactions between software and legacy infrastructure and that is happening as well within our network. This is a good example of the strength between the IT ecosystem and the traditional ecosystem. Our position here is very clear. We think that we need to be an accelerator of innovation. When it comes to the network, we think SDN is an opportunity, not a threat, for customers and for us. We think it requires us to be completely open and so we are in favor of open APIs within the different layers of the SDN enablers. It should also be completely interoperable and we are supporting the idea of white boxes. The equipment must be completely agnostic to any operating system. That is a good example of what it means to integrate the software and the traditional infrastructure. We have been working on this SDN journey with partners and providers that are sharing the same ambition when it comes to open networks -- that is, open source, open APIs and the capacity to accelerate.
TT: Where is the biggest growth opportunity when it comes to virtualization?
TB: There is virtualization of the network, of the workspace and of the IT. The virtualization of the workspace, which is becoming more and more mobile, is an area of growth for us. We have developed a gallery of applications with partners like Microsoft and Google. Using our networks, which are MPLS-based, we can offer those applications to our customers as if they were within the customers' data centers. But it's a virtual gallery and remotely accessible anywhere and anytime and on any device with the security and guaranteed bandwidth of our MPLS network. That is a good illustration of the virtualization of the workspace. Of course, there is virtualization of IT infrastructure as well. We have a strong position when it comes to private virtual IT through our big international partners. Then in some parts of Europe there is a requirement for sovereignty, and so we have a public cloud that is completely independent and with infrastructure in the country in question. It's important to note that security counts when it comes to all those topics and that is a critical part of what we are providing with our Orange cyberdefense capability.
TT: Which is the biggest headache out of network, workspace and IT virtualization?
TB: It's always a bumpy road. The public cloud is the really challenging story because the big American usual suspects are very strong, and by the big ones I mean Microsoft, Amazon and Google. It's an area where the investment required for the infrastructure is so high that there is a barrier to entry, and I think it will be difficult to fight here without stronger regulation.
TT: Is that because these players are regulated so very differently from telecom service providers?
TB: That is one of the big issues, yes -- there are differences in the rules of the game.
TT: How do you expect network-as-a-service offerings to change your business model in the future?
TB: There will be a huge change in the business model because it's about end-user centricity. It's no longer about providing connectivity to a site but instead about giving a user access to particular apps. That means greater automation, more plug and play and being more agile in terms of what you consume. We are very optimistic about the SDN journey and that is why we have been investing in this journey, probably starting many years before competitors and being one or two steps ahead of the competition.
TT: Is it crucial for Orange Business Services to gain an upper hand over rivals through this?
TB: Yes, but it's not just a question of fighting competitors. Its about addressing customer needs. Organizations expect Orange to connect apps wherever they are and that is something completely different from the business in the old days. You have a portfolio of apps you like to use as a consumer and the same is happening in professional life. That is something the digital and IT officers of this world have understood and are expecting us to help them provide to the marketeers, the finance team and technicians within their companies.
TT: What is the service that is most in demand?
TB: One is universal communications, including messaging and access to social networking tools. That is something required by any employee within any company. You also have the business applications that are specific to a manufacturing ecosystem or an airline or something else. Those are the two layers that are big opportunities for B2B. These needs will grow as more objects come online and we've been investing in that area too. And all this requires a lot of security -- you can't afford not to protect the data of customers.
TT: How are your revenues and profits developing?
TB: The good news is that analysts have been seeing strong improvement in revenues over the past three or four quarters. We also stabilized our P&L at the end of 2015. We made the right choices in terms of the organization and when it comes to understanding the customer expectations for the digital journey. That required capex investments a few years ago but it's now generating revenue growth and profitability that's very positive, and demonstrates we did the right thing.
— Iain Morris, , News Editor, Light Reading, Editor-in-Chief, Telco Transformation