This is the first in a new series of blogs in which PAC looks at key end user accounts and analyses the dynamics likely to drive future SITS expenditure.
Overview: Today’s news that Virgin Media is to be acquired by US-based Liberty Global in a $23.3bn cash deal, is one of the biggest events to hit the European telecoms and media sector in recent years.
The tie-up will create Europe’s largest broadband and pay TV businesses, ahead of rivals such as BSkyB, supporting some 25 million customers in 14 countries including the UK, Germany, Belgium, Switzerland and the Netherlands.
Some 80% of the combined company’s revenue will come from these five countries. As a result, it will transfer its headquarters from the current Liberty HQ in Delaware to the UK, with plans to look at a possible listing on a European stock market.
Current SITS Providers: Liberty Global has not announced any major IT outsourcing programs to date, and runs the large part of its functions internally.
It’s a different story at Virgin Media, where Accenture is a key IT services partner, providing a range of business process and IT outsourcing services. In 2011, the two companies signed a deal that saw Accenture take on responsibility for software testing and quality assurance. Fujitsu is another key supplier, having entered into a deal in 2011 to support Virgin Media’s residential and business installations and help provide engineering services. Virgin Media has also used TCS as an offshore delivery partner for applications services and last year, it brought two outsourced contacted center operations (managed by IBM) back in-house.
In terms of key software platforms, both Liberty and Virgin Media are major Oracle shops. Liberty Global is using an Oracle SPARC SuperCluster T4-4 to consolidate its server environment, but also announced a major deal last year with Oracle competitor JDA to deploy its supply chain, procurement and demand and inventory management systems. Virgin Media runs an Oracle ERP platform, as well as a BMC Remedy service desk system, a data warehouse based on Netezza and a BI stack based on Oracle and SAP BusinessObjects. It also uses a network inventory management system from Amdocs to improve network design, planning and assurance.
IT Leadership Team: Liberty Global has a large internal IT organization, split between the company’s current headquarters in Delaware, and its European hub in the Netherlands, and Australia. Balan Nair, is Liberty’s global CTO, a position he previously held at AOL, with Aamir Hussain (ex-Qwest and Telus), the CTO with responsibility for Liberty’s European technology strategy.
Virgin Media united the positions of CTO (for customer-facing offerings) and CIO (for internal IT strategy) in 2009 with the appointment of Martin Wyke, although he recently left to join rival TalkTalk. The company’s corporate application landscape is managed by Nick Good.
Future SITS Investment Areas: Liberty Global’s CEO Mike Fries said that there would be no big changes in Virgin Media’s strategy following the merger, and that the Virgin brand will be retained. There is very little overlap between Liberty and Virgin Media in the UK market (the focus of this deal) but the pact will clearly create some major medium-term systems integration and related testing opportunities around corporate systems for SITS providers – with Oracle standardization and consolidation a likely focus.
The new company will also be looking to leverage Virgin’s experience in the fixed and mobile telecoms space to take triple- and quad-play propositions to its customers in continental Europe. Again, this will drive future investment in CRM, billing and BI/data management systems and related services.
It will be interesting to see the direction that the new company takes with its set top box strategy. Liberty Global’s consumer broadband operation UPC currently uses a system based on software from NDS, while Virgin has partnered with Tivo to support its on-demand service. Standardizing on a single platform would seem to make sense.