Beware Lucent's INS sell-off plan

IT directors dealing with the former International Network Services (INS), bought by networking equipment maker Lucent in October 1999, should be wary of the network equipment maker's plan to sell off the division, Gartner has warned.

"Whoever buys this unit is likely to improve its future, since it will likely better fit the buyer's strategic plans than Lucent's," said Jay Pultz, an analyst at Gartner. "However, enterprises should watch out that the buyer is 'equipment neutral'."

"When the former INS was part of Lucent this was an issue," he added. "It was difficult to plan, design and implement, say, a Cisco-based system for a customer. Enterprises will be best served if whoever buys the unit isn't beholden to any one equipment manufacturer."

Gartner believes that possible buyers for the unit include equipment vendors such as Avaya Communications, systems integrators such as EDS and network service providers.

Financial buyers could also be interested in turning the unit into a vendor-neutral company, the analyst predicted.

Lucent has been beset by huge losses this year: some $4.7bn to date on revenues of $5bn to $6bn per quarter. It has announced plans to axe around 45,000 staff as it looks to return to profitability in 2002.

The firm wants to raise cash by selling off the small corporate segment of its worldwide business services, largely made up of the former INS.

But Pultz warned that potential design and implementation problems were not the only reasons to watch Lucent's sale plans closely. "Enterprises using the services of the former INS should be wary; this will be the second ownership change in three years," he said.

"The unit's enterprise customers should review their needs," he added. "Most of the unit's engagements are on a time and materials basis and can be ended by the customer on short notice for any reason, but customers with non-cancellable contracts should be prepared to invoke change-of-ownership clauses if necessary. Enterprises without such clauses should try to add them."

Keith Humphreys, an analyst at EuroLAN Research, pointed out that many of Lucent's problems have been caused by its dedicated service provider focus.

"Avaya has tremendously outperformed Lucent Technology ... since it spun out from Lucent Enterprise Business Systems Group a year ago," he said. "Lucent has stayed firmly focused on service providers and has lost out big time because of this strategy."