Catch John Lombard, CEO – Asia Pacific, NTT Ltd., in an exclusive conversation with Sanchit Vir Gogia, Chief Analyst & CEO, Greyhound Research on our executive Q&A series, #CounterpunchWithSVG.
As the name suggests, Sanchit does really pull some punches and then, of course, gives his opponent an equal opportunity to either counterpunch or dodge it in style. Take a read for yourself…
SVG: Thank you, John, for making time to speak with me for #CounterpunchWithSVG. Truly appreciate it. Last year, NTT Corporation announced its decision to combine all of its companies into one single organisation, that post-merger will have a combined turnover of USD 11 Billion. This change will seriously upset the apple cart of IT Services and Cloud Service Providers. Since this change is one of the most significant in the history of IT, can you throw some light on what triggered this change? More specifically, NTT is publicly listed, while Dimension Data is not. How will the combined company be structured?
JL: Sanchit, what triggered this change at the end of the day was pretty much an understanding that we needed to simplify as much as possible. We are 28 companies, and our clients from across the globe gave us feedback that they wanted simplification around the way we engage with them. So rather than have Dimension Data, NTT Communications, Netmagic, NTT Security, NTT Data and all other NTT companies function separately, the idea was to get them all together under one roof and function as one large global technology services provider.
Post this merger, we will be in the top 5 IT Services companies and have the largest global data centre footprint in the world. Ultimately, the key to this change is simplifying our engagement with our clients across the globe. We see opportunities for us to create new value for clients, increase our presence in the global market and differentiate ourselves from the competition. This is why we’ve decided to rebrand.
To answer your question on structure, the combined company will be headquartered in London under the new brand name, NTT Ltd and will not be listed. NTT group owns 100% shareholding in this new entity. The new company will comprise of 11 functions, namely: Go-To-Market Practices; Global Solutions and Large Deals, Global Accounts; Transformation and Platform Services; ICT Infrastructure Services; Finance; Corporate Strategy and Planning; People and Culture; IT; Marketing; Technology.
SVG: Thanks, John, that was helpful. So, one of the long-standing issues with NTT has been its relatively slower pace of change and growth compared to its US headquartered peers given its Japan-centric culture. Also, NTT over time has acquired many companies that have a completely different ethos and culture. How can we expect this to change post-merger? Will it be a scene of too many cooks spoil the broth?
JL: Well, NTT Ltd., is run by the Jason Goodall and his leadership group. Also, I’m on that leadership group. So it’s a diverse group of people as you would expect, men and women from different parts of the world and it’s representative of the markets in which we operate. So, you know, I’ve heard that feedback before, that you just shared, but what I can say is that the company is representing the markets in which it operates. So basically, we’ve got the autonomy to make the decisions that we need to make to run the company. Ultimately, Jason’s held accountable for the performance of the overall global business, and I’m held responsible for the Asia Pacific business. So that’s basically how the company will be set up.
And yes, the Japanese company will be run separately to NTT Ltd which caters to the global markets and is headquartered out of London.
SVG: Wonderful, thank you. That helps, John. So ahead of this call, I spoke with 14 large, global, end-user clients of Greyhound Research – some of these are your current customers, and some are prospects. One of the feedback that I got was that when NTT group of companies come and talk to us at this point, they speak the entire spectrum, right from hosting to artificial intelligence. Now, that’s a lot of length and breadth of culture and solutions, if you may. So how is that integration going to play out because that’s a considerable variation in terms of solutions and services. And, you know, it can create some gaps in solutions, lack of integration among other areas. So if you can give me a sense of integration in terms of solutions, culture, and people, please. How will this change under the new entity?
JL: Yeah, that’s a great question, Sanchit. Of late, we as the leaders have been spending a lot of time working with the team. So, you’re quite right, when you say that it’s actually a very deep set of solutions that we will be bringing to market. So there’s all of the global networking, MPLS and the global connectivity piece, then there’s data centre, corporate networking, collaboration, end-user computing, cloud, artificial intelligence among other areas. So, there’s a full stack of services. To expect any one person to be an expert in all that is unrealistic. What you will see going forward is a lot more sales specialisation.
This is where an account executive or client manager will bring the right skills at the right time in the particular opportunity, so the sales specialisation is where we bring on people with specific sets of skills that will carry a quota, but they will work with the strategic accounts, and work very much with the client. So, you know, that’s one area. Separately, we’re doing a lot of work on training. So just making people aware of what the portfolio looks like, people still need to understand the breadth of the portfolio, even though experts every single day. And we’ll be looking to make sure people are broadly aware of the portfolio, but then we’re going to start to build specialisation.
You also mentioned change management and I believe that is absolutely critical. I have just finished a 13 country roadshow across the Asia Pacific region where we have introduced Business Change Champions. There are a number of them, and there’s representation from NTT communications, Dimension Data and several NTT companies. Their role and focus are to communicate the messages and help facilitate some of this change. So, tons of internal communication has been happening, tons of training programs are starting and then coupled with that is sales specialisation, which is critical.
So, as I mentioned earlier, given the scale and significance of the change, we are fully invested in taking the necessary steps to help our internal teams understand these changes. As mentioned earlier, a Business Change Champion network has been established. This acts as a direct link between the integration project and employees from all operating companies. We can then answer questions as they arise, and provide support around the major milestones and decision points. Also, as I shared my example, our entire leadership team is hosting engagement sessions across the business, guiding teams through our strategy, purpose, vision, culture and values. This aligns teams on the compelling benefits for everyone, including our clients, of being part of this new organisation. Internal teams can effectively communicate these benefits externally, ensuring consistent messaging around our strategy, as well as what clients can expect from the change.
Separately, as part of our growth strategy, we have launched a new go-to-market (GTM) framework. It brings together the best capabilities, technology, infrastructure and services to drive our client’s digital agenda. The new GTM framework empowers our clients’ people, strategy, operations, and technology to work collectively across domains, geographies, and boundaries. Specifically, we help them develop and execute their innovation agenda by using new and emerging technology. This helps them disrupt existing business models and solve their business challenges.
Additionally, we are deeply invested in an open-innovation framework, driving innovation in partnership, with both our clients and partners. We can jointly develop new ways to solve business challenges, invent new solutions and create differentiating propositions.
SVG: Right, thank you. And, how long do you expect this entire change management program to be effective on the ground? Would you believe that starting next quarter, clients can expect more integrations in sales momentum and changes to their existing contracts?
JL: Yeah, so basically, the clients will start seeing the branding changes starting now, but we’re really conscious about minimizing disruption. One of the mantras of this change is no disruption on day one. Day one ie July 1, we don’t want to create a whole lot of noise and no action, and don’t want to have that noise impact negatively on our clients. So, the changes are done in phases from now till October, they’ll begin to see some of the systems change, new office signages, new NTT email addresses etc. However, to answer your question, how long will this process take? I think for some things, it will be months, and I think for some other in some other areas, as we build the new organisation and shake the portfolio and move to outcome-based managed services it will take few years to transform the organisation. I don’t think this is something that will be over in a few months.
SVG: To paraphrase and understand this clearly and concisely John, so the clients who, who already hold existing contracts, should expect business as usual in the next three to six months. And as sort of time goes on, will the team go out and revise those contracts under the new brand name, and assign new account managers and speak to them differently from a solution point of view?
JL: You’re absolutely right when you say we’re not going to be changing any agreements and contracts. All of the contracts that we currently have will remain, you know, and we are not looking to create a whole sort of legal process here. And that’s been a key part of the program that we have been working on. So we won’t be going and changing agreements. Period. As we bring on new clients and, and look at future renewals if it makes sense to make a transition at that point, we’ll look at it. One group you don’t want to annoy through these processes the client base.
So, we’re not going to be doing anything to disrupt. You mentioned account managers, for example. So, we’re conscious, even had the feedback from clients where they said, while this merger is great and makes sense, but can you not change and disrupt this particular account manager with this relationship because it’s working for us. So, we will take that client feedback into account.
SVG: And in the closing, one of the things I would love to understand from you is the fact that NTT Ltd now becomes a USD 11 billion juggernaut but it’s not going to be listed. Is there a timeline where you believe going back to being listed is going to be more beneficial, given the fact that there’s going to need much to pump in money to probably make acquisitions? Or perhaps, do you think that not being visible like what Dell did, and being under the radar off the street for a while and just changing things internally and then probably looking at it sometime, two, three years from now? What would you think about that?
JL: So, there are certainly no plans that I am aware of in the company. I think we’re quite happy with the current ownership structure and it works well for us.
SVG: Great! John, thanks for your time and I wish you the very best for this integration!
Analyst:
Sanchit Vir Gogia: Sanchit is the Chief Analyst, Founder & CEO of Greyhound Research, a Global, Award-Winning, Technology & Innovation Research & Advisory firm. To read more about him, click here.
Have a question on this or other Technology & Innovation topics? Click here to set up an enquiry call with Sanchit Vir Gogia.
Copyright © 2019 Greyhound Research. All rights reserved. You may share this research note using the options made available. Please don’t copy this research note (complete or parts) and distribute over the web and emails. Connect with us if you need clarifications.