‘Lenovo will double its R&D investment over next 3 yrs’
In April, Lenovo reorganized itself into three business groups and two sales organizations. The aim was to fuel the next phase of growth by pushing forward its flagship hardware business along with its services-led transformation in a bid to capitalize on new growth opportunities. In an interview, Amar Babu, president, Lenovo Asia-Pacific, talked about the restructured business, growth drivers and the road ahead. Edited excerpts:
How is the new structure helping Lenovo?
We have created three broad business groups. The first is the intelligent devices group (IDG), which is basically our PC (personal computer) group and our mobile business group. There is no change in that actually—it has been what it is for some time.
Our data centre group got rechristened as the infrastructure solutions group (ISG). The objective here was to bring in the view that we are not just supplying gear to the data centre, but with our portfolio across storage, services and solutions, we want to make more solutions to this. That is where the new solutions and services business comes in.
If you look at the whole architecture, we have right from the edge of the device to the cloud and back-end data centre. The solutions and services business stitches this together.
Alongside, we also restructured the sales organizations into two teams. China, which is a China-focused organization, and then the international sales organization, which includes Asia-Pacific, North America, EMEA (Europe, Middle East and Africa) and Latin America.
The total combined revenue for all Lenovo business groups in Asia-Pacific for the full year ended 31 March 2021 was $11.7 billion, which is 19.4% of the worldwide revenues.
What type of services are you really talking about?
We look at it in three categories. The first is support services, which is the traditional, after warranty and premier services that’s wrapped around the device. Then, there are managed services and ‘as a service’ offerings based on our capabilities. Third is vertical solutions built around very specific targeted verticals like education, retail, healthcare, manufacturing, and very specific areas within that, where we will come up with our own IP (intellectual property) and capabilities.
What are the key growth drivers of these solutions in India?
The first driver is the move towards a cloud-based environment. As companies move to a private, public or hybrid cloud, there is obviously a new set of requirements in terms of the ability to manage their cloud infrastructure.
The second driver is the trend of using large sets of data. When we look at IoT (internet of things), more and more data is being collected at the edge. With 5G, that is expected to further accelerate. You need to be able to store and manage the huge amounts of data that gets generated and run the right amount of analytics to get real-time insights.
The third element is obviously the pandemic, post which digitalization is not just a nice thing to do, but it’s almost like an essential thing to stay relevant in today’s market.
All of these are triggering the need towards more and more integrated end-to-end investments in the entire infrastructure and solutions space.
What’s your roadmap for the next three-five years to stay ahead of the competition?
I think the restructuring is the first step. We have made a very clear communication of our intent, strategy and vision. The key now is to be able to build on this.
Let’s look at the three categories I talked about—support services, managed services and vertical solutions. In support services, we are focusing on how we can provide more support around our core, enhance our quality, and expand the depth and breadth of support. Customers today are looking at services beyond the traditional warranty.
The second is managed services where we have to invest in our capabilities, platforms and the right tools because a lot of what we have to deliver to customers depends on the kind of capability and platform we can bring to them. Then, we have to focus on vertical solutions by building solutions for very specific industries, either with our own IP or through partnerships.
We continue to focus on R&D (research and development) and we have significantly increased our R&D investments by almost 40% year-on-year to ensure we have the right devices, while developing our capabilities and fundamental infra in the solutions and services space. Lenovo will further invest in innovation and double its R&D investments over the next three years.