Invitel, a major Hungarian telecom, is building its B2B activities by allowing firms to completely outsource their data, software and communication needs. CEO David Blunck explains that activity, as well as his firm’s consumer-oriented services.
David Blunck, CV
David Blunck has been the Chief Executive Officer of Invitel since January. Before that, he was the company’s Chief Financial officer, a position he had held since September 2012. Prior to joining Invitel, Blunck held senior finance positions with Colt Technology Services, Delta Air Lines and American Airlines in the United Kingdom and the United States. He earned an MBA from Indiana University and completed his undergraduate studies at Georgetown University.
When it comes to business services, Invitel CEO David Blunck keeps his head in the clouds.
“You can get safer, cheaper computing using cloud services,” he says. “CFOs should pay more attention to the cloud, as a way to save costs and improve security.”
The fourth-largest telecom in the country, Invitel is the largest firm in the sector that is not part of a multinational. It was built up through mergers of companies that “have been around since privatization”, according to the CEO.
While Invitel is a major provider of TV, broadband and voice connections to households, roughly half of its activities are in the business-to-business field of providing connectivity and IT solutions: Invitel offers to connect its customers to a secure remote network, and to provide all the necessary data and software services that a firm might expect from an IT department. “We can install it and maintain it. We are their IT guy. By taking on a company’s day-to-day IT operations, Invitel can free up the CIO’s time to focus on key strategic IT challenges,” said Blunck.
In one recent example, his firm agreed to provide the IT needs of Alteo Group, a Hungarian company that is involved in trading energy and producing energy from sustainable sources – and that reported more than HUF 6 billion in revenue in 2013. Alteo Group announced on November 13 that it had hired Invitel to provide IT-outsourcing services for the next three years. Alteo Group said the deal came after Invitel successfully handled the IT fusion needed when Alteo acquired Sinergy Energiaszolgáltató Kft. this summer.
The consumer-oriented end of Invitel’s business is a natural outgrowth of the firm’s history as a telecom. In certain segments of the country, Invitel and the companies it came from were always the leaders in cable networks for high-definition television and internet.
As Blunck explains, this is a very robust infrastructure. “TV requires a speedy network, which is faster than an internet or telephone network,” he says, adding that staying competitive means keeping that network up-to-date. “Our TV strategy requires us to invest heavily in network upgrades.”
Along with the classic co-axial cable, the firm has been adding a lot of higher-speed fiber cable to its original copper infrastructure. It has also developed extensive content packages, so that its HDTV subscribers can get the widest selection of channels available in the country, as well as services like language selection, an electronic program guide and video-on-demand. And by offering complete packages, it is able to sell internet and telephone services along with its TV services.
“Our TV strategy is working,” Blunck says. “Nearly one-in-two Invitel residential customers take a TV product from us today.” Still, he adds, countrywide, Invitel has captured only 4% of the market, which means “we have plenty of room to run”.
Invitel’s business-to-business services have also been built upon the company’s existing networks, according to Blunck, who notes that “Invitel owns infrastructure in the biggest 100 cities in Hungary.” Using its own networks, and other existing infrastructure, Invitel can connect firms to a robust cloud computing system that can allow them to completely outsource all their IT needs, providing them with systems that are better and cheaper than the ones they would develop in-house.
With the possibilities provided by cloud computing today, it only makes sense for customers to take advantage of the technology, Blunck says.
“In the early days of computing you had the dumb terminal, and the brains were all in the mainframe. In the PC era, the brains moved back to the desktop,” according to Blunck. “Now the pendulum is swinging back to the cloud world.”
Blunck says that the trend is toward a convergence of all our data and communication.
“We are moving to an all-internet-protocol world, where there is one pipe, with bits going through the pipe, whether voice or data,” Blunck says. “IT services are wrapped around that.”
Given that all the computing power a firm needs can now come through a connection to a cloud, it should not be an issue to users whether the information and processing power are local or remote. “If I’m having a problem with my CRM, it doesn’t matter if that system is local or not,” he says. “Why should our customers care which is which?”
In fact, the CEO says, many customers still make a distinction between the data they store in-house, in the “near cloud” of a local data center and in “what I would call the ‘far cloud’, which is a remote server that could be anywhere in the world”.
He suggests that some of these concerns are logical – because security, legal provisions and costs can be reasons for keeping some data closer to home – while others are simply due to a need to develop trust in the new technology.
“We find that there are many IT directors who are understandably conservative,” says Blunck. “Some IT directors, if they could, would put their servers at the end of their bed.”
Actually, Blunck says, data stored with Invitel is likely to be much safer than data kept in-house. “Usually, a server room is just a storage room, maybe with a lock on it,” he explains. “Invitel’s data center in Budapest has 24-hour armed security, 24-hour staff, redundant power connections, redundant cooling systems, temperature and moisture control, fire prevention and other important measures. It is a ‘top-tier’ data center in Budapest.”
Still, because of customer concerns, Invitel often sets up a “hybrid” cloud system, in which clients use a combination of the cloud and local storage. “The hybrid cloud is a big part of our approach,” says Blunck. “A hybrid solution provides a migration path to the cloud.”
For now, it would seem the way forward for Invitel’s business-to-business service is deeper into the cloud, and the way forward for its consumer business is through HDTV. While the two types of activities grew naturally from the infrastructure that was owned by Invitel and its predecessors, Blunck says that they now require a different focus, with their own separate units.
For instance, he says, each unit has its own IT department. “We have moved away from the traditional synergies in order to serve customers better,” he explains, adding that the firm is seeing healthy growth in the business-oriented and consumer-oriented activities: “We are bullish about both of our business units.”