Connex17 - Connecting with Alcatel-Lucent Enterprise

Just in time for Mardi Gras preparations, Alcatel-Lucent Enterprise (ALE) held its analyst conference in New Orleans, where the discussion was all about verticals and ALE's new cloud overlay service called Rainbow.

CEO Jack Chen kicked off the event, explaining that ALE's vision is "To deliver the customized technology experiences our customers need to make everything connect." ALE is "changing how businesses can buy technology, how they deploy it, use it, and leverage it by tailoring solutions to organizations." And that's where the vertical focus comes in. Looking out to 2020, ALE's vision is to be "An impactful player in focused vertical markets and the B2B digital evolution."

In the past couple years, ALE has invested in several verticals, and has transformed the company to focus on these key verticals throughout the organization. ALE's first vertical focus was hospitality, and has since added healthcare, education, transportation, and government. Chen noted that ALE has designed its solutions with a vertical focus, and has transformed its go-to-market to be aligned with its vertical strategy and business model.

As Christophe Ameline, Strategic Partnerships & Vertical Sales, explained, "Verticals isn't just a marketing slide - we are building the ecosystem, and training and hiring the right people." ALE has been focusing on becoming specialists in the five verticals, and has spent a lot of effort understanding the ecosystem, challenges and pain points, end user requirements, competition, regulations, market dynamics, business models, and best practices of these verticals. When asked what ALE does differently from others in verticals such as hospitality, Ameline told me that the company has a hospitality offer that is based on room occupancy, so that the hotel is charged only when a room is occupied, which saves money for the hotel. ALE also reinvented the connected bedroom and has integrated its 8088 phone with the room automation system to enable the hotel guests to control the air conditioning and heat, open and close curtains, request room service, etc. using the large screen on the phone. ALE also developed mobility applications for guests, providing a softphone client that runs on the guests' smartphone or tablet, enabling the guest to use speed dial for hotel services click-to-call to speak with hotel staff, make spa reservations, etc., through the mobile device. ALE has had great success with some very high end hotels, and is also working with two- and three- star hotels as well.

Flavors of Rainbow

Rainbow is ALE's cloud service, operated and run by ALE and offered as an overlay service on top of existing solutions to let the customer keep their investment. With Rainbow, users can text, call, video, and share. ALE calls Rainbow a relationship management platform, connecting people inside and outside of an organization, providing relationships between identities (such as clients, PBX, IoT, third-party apps) and services. Rainbow will be able to connect any PBX to the cloud through a connector, although the initial integration service will be with ALE's OmniPCX Enterprise (OXE) and OmniPCX Office (OXO) communications platforms. Focusing on a hybrid approach, Rainbow can be viewed as the glue between a company's PBXs and cloud-based apps, while providing a range of UC capabilities. As an overlay solution, it integrates with a PBX (which can be premises- or cloud-based) for the call control.

There are two versions of Rainbow - Rainbow Essential is a freemium service offering UCaaS capabilities such as presence, IM, click-to-call, audio/video calling, and screen sharing. Rainbow Premium, which will be GA later this year, will provide multi-party conferencing, additional PBX integration, and more administrator services, such as user management, back-up, and directory integration.

What makes Rainbow different is that it offers not just UCaaS, but also Communication Platform as a Service (CPaaS) functionality. ALE created open APIs for developers to create applications and to communication-enable business applications. As a CPaaS offering, Rainbow is a cloud platform offering APIs, software tools, sample code, and prebuilt applications. ALE has made public 50 APIs for chat, video, and provisioning services, including telephony, messaging, voice apps, storage, authentication, and AI. When asked how it compares with other CPaaS solutions like Twilio, ALE noted that Twilio addresses the consumer market with SMS applications, and that Twilio exposes APIs to enable making calls from the cloud. Rainbow exposes APIs to developers, but when you make an API call it goes through the PBX. Rainbow's business model is similar to other CPaaS offerings, as Rainbow CPaaS is transactional based, and customers pay per API call once they reach a certain threshold of usage.

ALE presented several CPaaS customer examples, including a large bank in Spain that enables its 500,000 priority customers to use the bank's mobile app to directly interact with their bank advisor through voice, video, or text using a secure and authenticated connection. Another customer is a large hotel chain in Asia that uses Rainbow APIs to establish a direct connection between guests and the cleaning crews to report when a room needs to be cleaned, and then monitor execution and quality, which optimizes the cleaning cycle, which ultimately means that rooms can be available for guests more quickly.

I spoke with Nicolas Brunel, EVP, Communication Business Division, who discussed ALE's vertical strategy, as well as Rainbow.

Rainbow isn't ALE's only cloud story. The company also offers OpenTouch Enterprise Cloud (OTEC), and the new OTEC-S, a multitenant service aimed at small installations of 5-100 users, as well as a private cloud offering called OTEC Flex. OTEC and OTEC-S are subscription-based software offerings that can also connect to Rainbow for UCaaS features. Rainbow is a public cloud service, while OTEC and OTEC-S are hosted in the SP or partner's cloud. ALE runs and operates Rainbow, while its partners host and operate OTEC and OTEC-S.

I spoke with Jack Jachner, VP Cloud Business, North America, who discussed ALE's view of the cloud and its cloud solutions.

Conclusions

I have to withhold judgment on Rainbow as it's very early days for the service, and the connectors for integrating with the PBX won't even be rolled out until Q3. It's too soon to say how many of the Freemium customers will upgrade to the paid Premium service. ALE is targeting Rainbow to its existing installed base of 30 million users, which is the most logical approach. I have some concerns about the fact that while ALE runs the Rainbow public cloud service, it doesn't have its own data centers and uses partners' data centers in different regions throughout the globe. With IaaS platforms such as AWS available, I have to wonder why ALE is relying on partners rather than hosting the service itself, at least in some regions where AWS operates and it makes financial sense.

Rainbow's overlay model is very logical in that it allows ALE to leverage its installed base. Many customers don't want to replace what they're using with a new cloud solution, and with Rainbow they can access UC and collaboration capabilities through the cloud while retaining their existing investments. This seems like a "happy medium" for many companies and could prove to be a successful strategy for ALE.

As the new CEO, Chen has done a good job of setting a vision and mission, and we're finally seeing some good progress in the North America region, which showed double digit growth for the communications business in 2016.

I've always been a strong believer in taking a vertical approach, and ALE's early successes in the hospitality market demonstrate that it has a good template for approaching these vertical markets. This new focus requires working to train and educate its sales people and partners for the various verticals, and there will be some partners that don't want to make the effort to learn something new and change the way they do business. ALE is investing in verticals, cloud, and new business models, but will its partners be willing and able to adjust and evolve?

ALE has a defined development path and knows where it wants to be - a leader in IoT-enabled networks, CPaaS, and hybrid communications. The company is now financially and operationally healthy, and has a clear vision for how it will succeed. Let's hope that the new leadership and focus will help the company meet its goals.