NTT Com

NTT’s global acquisitions bear fruit

Nikkei Computer magazine has run a 4 part series (articles in Japanese) on whether the formerly domestic oriented telecoms company NTT group can really succeed globally.  The answer appears to be yes, in part thanks to its agressive acquisitions over the past few years of Dimension Data, Keane, Centerstance and others.  The major question is whether a strong enough leader can be found in Japan to keep the momentum going.

The first part of the series examines NTT’s recent successes in winning deals in the USA – with the Texas Department of Transportation for application maintenance and support involving NTT Data, Dimension Data and MSSP Solutionary (which it acquired last June) and an IT services contract with Yum! Brands (KFC, Taco Bell and Pizza Hut) in Kentucky. Both of these deals involve the transfer of hundreds of employees over to NTT Data, which I imagine will prove quite a challenge for NTT.

An insider says that because NTT is very much seen as a challenger in the North America, this sense of being an outsider has united NTT ‘s various companies to cross sell and bring in deals such as the TDoT and Yum! deals.

The NTT group lost a trillion yen (around $10bn) in the US market a decade or so ago on investments in AT&T Wireless and Verio.  In response to the question of why they are trying again now, Tsunehisa Okuno, Director of the Global Business Office at NTT Holdings says that as the USA is the largest and most competitive IT market in the world – “if we can’t succeed there, we will not succeed in globalizing our business.  The winner in the cloud market is  not decided yet, and North America is the key to that market”.  NTT’s intention is to develop its technology and skills in North America, then bring that to Europe, the simplify further and bring to developing markets.

Nikkei Computer highlights three areas of concern for NTT:

1. Developing the strongest services

In particular, NTT need to address the duplication of IaaS and MSS offerings from its subsidiaries NTT Communications, Dimension Data, Solutionary and NTT Security (in Germany) if it is to compete effectively with Amazon, IBM, Dell and Verizon.

2.Standardizing knowhow and methodology

NTT is finding that rolling out what they have developed in Japan as the global standard has not been easy, and instead is now looking to standardize methodologies originating in its overseas subsidiaries.

3. Complex organisational structure

NTT has retained the brands and the founders of the companies it has acquired, believing this to be key to keeping motivation high.  However it can lead to lack of oversight and any sense of unity across the group, as well as a very complex organisational structure. NTT Holdings is still over 30% owned by the Japanese government, and there are laws in place preventing anyone of a foreign nationality becoming a director in the holding company.

Up until now NTT has  relied on posting a small group of executives across its subsidiaries who knew each other well and had the same vision for NTT – Okuno was from NTT Com, Kazuhiro Nishihata a director at NTT Data also comes from NTT Com and used to be President of NTT Europe.  Okuno feels a limit has been reached on this management by jinmyaku (human network) and from now on NTT will have to communicate more based on logic, taking as long as necessary to persuade others.

Takashi Enomoto, former Senior EVP of NTT Data, in charge of overseas business, was very keen that there should be one NTT Data brand, and was able to persuade the founders of acquired companies by pointing out that IBM is IBM, Accenture is only the Accenture brand. A second Enomoto is needed at NTT to ensure the success of its global strategy, says Nikkei Computer.

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