Welcome to the first of a series of contributions from team members from the NEP/OEM Sales & Industries Group. I've been flying solo for some time on this blog but I've finally managed to rope-in some help from the team. The idea is to learn more about the various parts of the business and highlight the talented people I'm lucky to have working within our group.
Kevin Palmer runs the LifeCycle Solutions (LCS) Group. LCS didn't exist a couple of years ago but
has now become the most important strategic differentiator for Sun with Network
Equipment Provider (NEP) customers. As one of the early proponents of forming
the LCS organization, Kevin's a strong advocate for the financial and
operational benefits it delivers to our customers.
All About The LifeCycle Solutions Group, by Kevin Palmer
Putting it into context
Our Network Equipment Provider (NEP) customers used to generate much of their competitive value from proprietary hardware systems. As communications networks migrate to IP-centric architectures, software runs the network, and the networks run on servers. Our NEP customers don't get the same value from reselling commercial-off-the-shelf servers as they once did from selling their own proprietary hardware. If fact, from a financial perspective, it's a little harmful because it dilutes their gross margins. But Network Equipment Providers are shifting their business models. They are generating a lot more value for their shareholders and customers by the software they develop and the services they provide.
So, what does this have to do with the LifeCycle
Solutions Group?
Well, LCS works with our customers to co-develop their products. Computing systems are not our customers' core competency, but they are Sun's core competency. Sun is #1 in NEBS (Network Equipment Building Systems) certified servers, the specialized servers used by Network Equipment Providers and Service Providers in central offices.
Why do customers work with LifeCycle Solutions?
Well, it allows them (1) to lower the cost of product development, (2) to focus their product development investments on the software and services that add value and differentiate their products and, (3) they can launch products faster when they work with Sun, in parallel, to develop their products.
LCS Team
The LifeCycle Solutions group is run by people with specialized telecommunications knowledge. Many of them came to Sun with prior product development backgrounds with NEP's, so they know the business, they know the development process, and they know the regulatory issues involved in building these kinds of products (like the Services Resource Point and Wireless Call Server, to the right). Our customers are loving the service and the financial benefits this group provides. They think it make sense to build on Sun, and to build at Sun.
If you're interested in learning more about LifeCycle
Solutions, please contact Kevin at kevin.palmer@sun.com
I'm really glad to hear that the LCS group is now real. You've worked hard to make this happen and it ought to get great traction with customers. Your focus on the key pieces of customer value is refreshing. It's avoids the myopic features focus that's all too common in the tech world. And it's right in line with what we've evangelized at Sun. Our new blog deals with just this issue. Congrats, Kevin. And to Darrell for supporting it.
Posted by Rick on June 01, 2009 at 01:59 PM EDT #
Great work, Kevin. You've really nailed it. This can be a great value and revenue stream. Good luck to your team.
Posted by Fred Stein on June 03, 2009 at 05:53 PM EDT #
Well, this entry is unclear. The server stack images are inreadable and bring no real information to this blog entry.
LCS: Sounds like another Sun marketing idea that does not work...
I don't understand how this is different from what was done before by the OEM support teams and by your engineering teams ? This has been already done in the past at Sun and proved not to work for one unique reason: Sun does not have developers who understand the telco business.
NEPs are heavily using smaller systems and linux based boxes.
They do understand their business enough to develop by their own.
Posted by Andy on June 04, 2009 at 05:00 PM EDT #
Andy.../dude/...I've been wondering where you were.
Let me try to explain....it sounds like you might be hanging on to some old perceptions.
The server stack images above were supposed to be unreadable in great detail. They're systems that we have designed and built for one of our NEP/OEM customers. Didn't want to put too high a resolution image on the blog posting. They're there as a tangible example of the kind of stuff that we work with our NEP/OEM customers to design and build...everyday.
LCS /does/ work. Incredibly well. It's a significant part of Sun's NEP/OEM business. It's not Marketing spin (AG has left the building). It's real. We have people in LCS that used to work for a number of the NEP's, and that have 20+ years experience in the telco and NEP businesses. They're rock solid contributors to Sun's business, and more importantly, to our customers' businesses.
You are definitely right about one thing; we do not have developers that understand the telco business. (Their strength is building products for the enterprise.) But we don't need to. The objective isn't to fill racks exclusively full of stuff invented at Sun. The objective is to build fully-integrated, frame-level products that solve our customers' business problems. And here's one of their business problems; like it says above, NEP's no longer get differentiating value from hardware. IP networks run on software. Software runs on computing gear. NEP's aren't in the computing business. To resell other companies' computing gear dilutes an NEP's gross margins. This is bad for their shareholders. (The good news is that their differentiating value is shifting to software - which has killer margins. /Very/ good for shareholders.)
So, if reselling other companies' computing gear is bad for an NEP's margins, so too are the business processes involved in developing and building frame, after frame, after frame of computing gear. Every dollar that they put into designing, architecting, seeking regulatory certifications, testing, etc. is a dollar ROBBED from investing into those things that give them differentiating value. So, we co-develop our customer's products with them. We do what is Sun's core competency, and we let them focus on their core competency. Ultimately, those are the things that bring them, their shareholders, and their customers more value.
And like I said, what goes into the rack doesn't have to be built at Sun. We routinely build third-party content into these frames. You see that rack on the left, above? There's a lot of third-party stuff in there.
Andy, any time you want to meet some of the managers or architects at LCS, or visit the place where we build these products for our customers, just send Kevin Palmer an email (his address is above). He likes reading your blog entries. He likes that you challenge us (it makes us sharper). And I know he'd like to show you around. We've got a good thing going.
Later, dude.
Posted by The LCS Dude on June 04, 2009 at 10:30 PM EDT #
I am here, always reading your blog and interested in your answers and following...
I just feel I am the only person reading your blog...too few consistent comments...
Well, I take your point, but then Sun should have focused on those ideas earlier.
Why this strategy does not translate into money ?
Sun's revenue have been declining quarter after quarter without tangible and sustainable signs of rebound. Numbers talk by themselves.
Another weak point concerns the revenue recognition by countries, sales and LCS.
This is a permanent battle were Sun local sales employees might fight against coporate groups for a particular bid. Sun have been very bad at managing these conflicts.
Posted by Andy on June 05, 2009 at 10:16 AM EDT #
Andy - Good to hear back from you. Love the dialogue.
You raise a couple of good points. Let me try to address them...
Why not do LCS sooner? We actually have been doing this for a few years. But we've been doing it quietly. Not promoting it publicly. I guess that's one of the luxuries that we have given that the NEP community is relatively small. We didn't have to do a lot of promotion or advertising. We just went out and talked with our customers.
I suppose that you could argue that we should have been doing LCS 5 - 7 years ago, rather than three years ago. But the reality is that we formed this group and began doing this work in a more focused way when the Communications industry sales organization was formed under Darrell Jordan-Smith. That was the beginning of bringing more focus on the industry, our customers, their businesses, and what we can do to help them solve their business problems. Which brings me to your money/sales question...
I wish I could answer this question very directly, but I can't. Sun doesn't publicly report its financials down to the level that's required to answer your question the way I would like to. The information isn't /publicly/ available. So, I would get shot (or maybe the folks in northern California HR would just give me a big group hug, and then tell me I'm fired) for disclosing the exact numbers. BUT...let me assure you that the sales numbers for Darrell's group have been over-the-moon good. Excellent growth. They stand in stark contrast to Sun's sales results. And the LCS-related sales have been very, very good, too. Everyone in the NEP/OEM Sales group (formerly "CMP") should be very proud of their results.
To your last point, revenue recognition. We don't really have this problem in LCS, or in Darrell's group. Our customers are global, so we've organized ourselves globally, too. All of the people role up into a single, global sales organization. So, if someone is on the Alcatel Lucent team, from a revenue and support standpoint, it doesn't matter to us if the customer is in Shanghai, Chengdu, Villarceaux, Antwerp, Stuttgart, Naperville or Ottawa. It doesn't matter where the order comes from, or where we ship their order. The global team gets the credit. But, like I said, this is for Darrell's sales organization. He's pretty much solved that problem. Much of the rest of Sun's sales organization still has the issue that you raised. It's a foolish problem, with foolish consequences (that I won't go into), and it should be solved.
Andy, thanks for your questions.
Later, dude...
Posted by The LCS Dude on June 05, 2009 at 11:44 AM EDT #