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January 2018

GTT Reinvents the Business Model for Global, Enterprise-Serving Telcos

GTT Reinvents the Business Model for Global, Enterprise-Serving Telcos

Perhaps no time in history have telecom opportunities in the global enterprise business been greater.

Content providers are pushing huge volumes of data, video and other content across the oceans — with high capacity IoT, 5G, and Virtual Reality on the near horizon.  And enterprises are rapidly pumping their data into the cloud and communicating globally like never before.

And yet, amid all this opportunity, many of largest carriers in the world seem to be backing away from the enterprise business — and failing to invest in it.

One indicator of this trend is the decline in the enterprise and wholesale businesses of Verizon Communications.  Verizon’s enterprise and wholesale businesses fell 5.5% from 2009 to 2016 — and the decline has gotten sharper in recent years.

Verizon Business stats

However, Verizon has a big appetite for acquiring Internet and content companies.  It bought AOL in 2016 and has agreed to pay $4.8 billion for Yahoo.  Likewise, AT&T, the other big US global enterprise telco, is making a bid to acquire content provider Time Warner.

Now regardless of whether you believe large telcos’ lack of investment in the enterprise business is a temporary or permanent trend, it’s worth reviewing three key reasons why their current enterprise business model is now faltering:

  • Legacy networks — Calling large telcos “incumbents” is very apt for their business is highly encumbered by outdated network infrastructure.  Another issue: they never warmed to integrating with the bountiful off-net infrastructure that’s emerged in recent years;
  • Siloed Systems — Another incumbent problem: they are saddled with dozens of siloed systems that fail to manage and report on network and business operations in a unified and accurate manner.  Even integrating new network technology and acquired companies is prone to failure and costly delays.
  • Commercial Rigidity — Finally, the influence of companies like Amazon AWS has opened enterprise clients’ eyes to far more flexible ways of doing business with infrastructure vendors.  Here too, large incumbents are struggling to adopt the kind of commercial model clients expect.

Fortunately, not every telecom is treating the global enterprise business as a cash cow.

One emerging champion of the enterprise business is GTT.  This expertly managed mid-sized telco, who recently joined the billion-dollars-a-year in revenue club, is rapidly growing market share and acquiring global assets like Hibernia Networks.

In the bragging rights department, Fortune Magazine recently put GTT in its Fortune Future 50 list of companies best positioned for strong future growth. (No other telecom operator made that list.)

So, to get a deeper view of this up-and-coming firm, I recently visited GTT’s New York offices where I received an insightful briefing from Gina Nomellini, the company’s Chief Marketing Officer (CMO).  In our interview, Gina beautifully explains GTT’s strategy and market position.  She also gives fascinating details on both the systems and corporate culture side of the company.

Dan Baker, Editor, Top Operator: Gina, congratulations on your company’s recognition in Fortune.  It would be great if we could begin with a brief explanation of GTT’s strengths in the marketplace.

Gina Nomellini: Dan, we think of GTT’s strengths across a few key pillars:

  • Expansive Global Reach — We own a Tier 1 network: we are a top 5 IP backbone provider, one of the largest in terms of routes.  We also own and operate a low latency optical transport network — the fastest transatlantic route connecting the U.S./Canada with western Europe.  We couple that with our access in the U.S., plus another 2,000 local access providers around the world.  In short, we can connect clients to any location in the world or any application in the cloud.
  • Comprehensive Cloud Networking Portfolio-- Our cloud networking story is straightforward: layer 1 to 3 networking services — optical transport, Ethernet, and both private as well as public IP.  We then layer managed services on top, with the key offerings in SD-WAN, managed equipment, and managed security.  And we offer pre-provisioned connectivity into cloud exchanges in dedicated data centers around the world.  Finally, we provide voice services and UC in more than 65 countries, with voice termination services to over 200 countries.
  • A Focus on Global Connectivity — It is important to note that GTT is not a data center provider and we’re not out selling mobile handsets or software.  Our portfolio is focused and deep in global connectivity solutions such as SD-WAN and other managed services.
  • Operating Efficiency & Flexibility — Finally, we live by our core values of Simplicity, Speed, and Agility.  At GTT you’ll see those words everywhere: on the walls of our offices, on our website, in our internal communications.  We’re committed to making that slogan real.  We aim to be easy to do business with, to respond rapidly and to say yes to our clients.  And to enable that, we develop and offer our services in a simple, straightforward and price-consistent way making them easy to buy.
It’s one thing to make flexibility and operating efficiency a goal.  But I understand GTT also has developed an internal system that makes those goals more achievable.

Yes, we owe a lot of our commercial flexibility to a unique, in-house built CRM which we refer to as our Client Management System (CMD).  This platform tracks all our client transactions from quote-to-order-to-bill.  CMD provides us with one record of truth and a uniform view of our inventory.

From a single pane of glass, we can generate reports, integrate assets, and view profitability.  GTT has been using and nurturing CMD from our earliest days.  It’s now become part of our DNA.  Bottom line: the CMD system is very powerful and it is incredibly important to us.

Wow, you’re talking to a guy who authored a few analyst reports on commercial network inventory, billing and ordering systems.  And the ability to unify systems was always the Impossible Dream at large telcos.  Can you provide an example of how CMD gives you leverage?

Perhaps the best example is when we’re acquiring another telco or asset.  A large telco finds this process very challenging.  When they make a purchase, they need to report across multiple different platforms and ask many different people for data.  That’s why it’s a real advantage when you can reach into a single system with a couple of keystrokes and pull out the data you need.

When GTT buys another company, we set a goal of completing integration within two to three quarters — the speed depends on the size of the organization or asset we buy.  So far, we’ve stuck to that goal and met all of our guidance around integration.

To ensure successful integration, we need to rapidly assess data records from the acquired company, map them to our records, and integrate them into our system.  CMD is very flexible: it allows us to represent both direct and indirect cost components.  It’s also agile when it comes to visibility into our inventory data, network statistics, and billing records.

Compared to the legacy systems that encumber other organizations as a result of their M&A activity, GTT’s operating principle is to maintain a streamlined systems environment.  And we have instituted the management discipline to support this principle.

Now as powerful as any software tool is, it’s only as good as the company culture that supports it and keeps it relevant, accurate and user friendly.

Dan, culture is a big deal at GTT.  It is important to constantly communicate with our employees and the market at large.  We’ve put together a highly disciplined and focused team.  Whether it’s serving a client or buying a new asset, we collaborate, we thoroughly investigate, and we ensure alignment with all stakeholders.

For example, we conduct company-wide “brown bag” meetings every week.  All 1,200 employees are invited to attend and all 29 offices around the world participate via video conference.  These meetings are an effective way for management to reinforce the company culture and inform the employee community on our business objectives, products and services, and various aspects of our operations.

Topics vary from week to week.  For instance, last week we were coached on financial disclosures for the investment community.  In each weekly meeting, our CEO, Rick Calder, takes a few moments to drive home a few additional points.

Now enterprise business is your key market.  How are serving those clients?

Yes, roughly 70% of our revenue is enterprise, so it’s our main focus.  Most of that business comes through direct sales, but we’re also growing our channel presence.  Our sales force is growing rapidly, and we continue to hire.

GTT is gaining ground and market share in the enterprise market.  Today it’s more common for clients to ask us to bid as opposed to us making the initial introduction to the client.  That’s an encouraging trend.

We believe enterprise clients are looking for a better service experience.  They are looking to partner with a provider in a simpler manner.  They seek out a telco who is easier to do business with.  This trend plays into our strategy as the market consolidates.  In the U.S., there are only a few choices now, whether it’s AT&T or CenturyLink or Verizon.

We’re also flexible.  As an example, our SD-WAN service provides a single price for a cable circuit as well as an Ethernet over Copper or DSL circuit, plus network firewall.  If either access technology is not available at the site, we provide wireless 3G or 4G.  We manage all components with an SD-WAN box at the client location for a bundled price.  So, it makes it very easy for people to evaluate our offer, budget and plan for it.

And you have a strong wholesale business as well.

True, our carrier division services carrier and content provider clients.  As a Tier 1 ISP, we provide significant volumes of IP transit around the world.  We also sell high capacity optical transport services on our three transatlantic cable systems: GTT North, GTT South, and GTT Express.

We provide extension services or out-of-region services that complete the networks of other carriers.  For example, we might connect via NNI to an Asian carrier that meets us in Los Angeles and San Francisco.  We distribute their traffic for them throughout North America.  One of our strengths in this model is our flexible network pricing model.  We make life easier for carriers with standardized pricing throughout the United States to make it easy for them to plan.

Thank you for this great briefing, Gina.  Speaking to you, I really get the sense that GTT has got a tiger by the tail — and I think other aspiring enterprise telcos will seek to follow your model.

Thanks, Dan.  When I came to this company, I found it incredibly refreshing.  Our formula is truly working as exemplified by the growth and expansion of our business.  I attribute a lot of our success to a combination of a consistent strategy, management discipline, unwavering client focus, and a cohesive company culture.

Copyright 2018 Top Operator Journal

 

About the Experts

Gina Nomellini

Gina Nomellini

Gina Nomellini is GTT’s chief marketing officer, leading GTT’s brand development, messaging and marketing communications, product development and product management.  Ms. Nomellini brings over 20 years of global telecommunications experience to GTT.

Prior to joining GTT, Ms. Nomellini served as chief marketing officer for One Source Networks, directing all marketing, product and commercial initiatives for OSN.  Before that Ms. Nomellini was the vice president of global product and marketing for Telstra, where she oversaw the company’s full suite of international products.

She has also held various leadership positions at Level 3 Communications and Broadwing Communications.  Ms. Nomellini earned a Bachelor of Arts from the School of Foreign Service at Georgetown University and an MBA from the University of Texas at Austin.   Contact Gina via

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