Behind the Scenes: TANDBERG’s Acquisition of Codian

Integration, innovation…and implications for customers

This September, TANDBERG completed a landmark acquisition of Codian, an award-winning developer of high-definition videoconferencing infrastructure products. Discover spoke with EMEA President Geir Olsen, who was instrumental in the Codian deal, and David Holloway, former Codian CEO, for an inside look at the integration strategy.

Q: How long has this acquisition been in the works?

Geir: Our first discussions were about two years ago, but we were very far apart in our goals – you could say, ‘on different planets.’ We took it up again in April of this year and, although we did start far away, we could both see that it could be done. We were able to follow up quickly that May to move closer and then we met on a weekly basis over video.

David: We have talked to TANDBERG at different levels since we launched our first products in early 2004 and since then we have always had a friendly, if competitive, relationship. This year with the strong growth of both TANDBERG and Codian, together with the technology shift to High Definition, we realized that a deal was possible and was a good fit for both companies. Once we started talking seriously we were able to agree on a deal and get it completed very quickly.

Q: How is the acquisition timeline and integration process more productive when both parties have video?

Geir: The integration is going well and quickly – that is in great part due to how we used visual communication in the acquisition process. Our first meetings we did in person. Once we agreed what we wanted to create, we met by video weekly up until the final closing meeting. It was myself and Marjorie Lao (CFO) in Reston, OJ Winge (Head of R&D) in EMEA and the Codian team in London.

I never would have done this over audio. In a negotiation it is too important to see how people react to visual cues. And, by waiting for people to travel we would have lost significant time.

Also, meetings over video helped our internal team be more prepared and align more quickly. That meant that we were able to cover more ground more quickly when we met with Codian. As a result, the time between the announcement and the closing was only 18 days.

David: Using video conferencing was a key part of our negotiations with TANDBERG but it has really come into its own post-acquisition.

Making an acquisition a success depends on clear communications and bringing people and teams together from across the company. By using video we are able to do this quicker and more effectively. Video has removed barriers and enabled the integration of Codian into TANDBERG in all areas from R&D, sales, finance, customer support, manufacturing and marketing.

We really feel like we are part of the Tandberg team because we are able to meet everyone in person on HD video.

Q: How do you address the concern that TANDBERG does not have acquisition experience?

Geir: The challenges of an acquisition don’t take us by surprise. We are well-versed in acquisitions – we have had seven – three historic and four in recent years, including Codian. First, we purchased the TMS team, a small acquisition in Norway. Then, when TANDBERG was only about 30 to 40 people we bought CBCI and then quickly after that NuVision – in order to access the US market. Our three recent acquisitions – Ridgeway, Ectus, Ivigo – all were smaller deals that were mainly R&D “bolt-ons” but we have experience in integrating an organization and sales footprint as well.

The Codian integration is occurring quickly and according to plan. Our priority is linking our operations to make order entry seamless. In fact, the TANDBERG team is already taking orders for Codian products.

We know that there will be challenges as we integrate a sales team, partner network and customer base. I’m sure that during Q4 there will probably be a bit of confusion. But, the organizations are actually very well matched and as we transition we will learn together what is the best approach.

David: I have been impressed by the realistic view that the TANDBERG team has to the acquisition. This means we can address the issues together quickly and openly. As a result the integration is happening smoothly and we have not been distracted from delivering great products and service to our customers.

Q: How do the cultures of Codian and TANDBERG compare?

Geir: We are very well-matched in terms of culture. We both have tremendous pride in the products we deliver. In both companies there is a focus on customer value. We share a technical philosophy that includes a commitment to standards and a vendor-agnostic approach. Our channels selection process is also similar. Both companies have been on the fast track in terms of growth and that has shaped our culture.

There has always been tremendous respect between Codian and TANDBERG, for our products and our people in the field, and informal links between our R&D departments. We got a standing ovation from both companies when we made the announcement. That alone told us that there was already a perceived cultural fit between the two organizations.

On difference is in our sales approach. Codian is very technically savvy and has a product-oriented approach. The TANDBERG team has more of a solution approach. We are going to leverage both as we work together.

David: I agree with Geir. There is a fantastic fit between the companies both in terms of culture and our ambitions in the market. When negotiating the acquisition it was important to us that there was a strong cultural fit between us; we have a lot of pride and passion for what we do and we saw the same in TANDBERG.

From the outside looking in we have always had great respect for TANDBERG, from the strong engineering, the quality products, to the focus on the customer and customer service. From inside TANDBERG I am pleased to say that this has continued. We are working well together and we will combine the best of both companies.

Q: What does the acquisition mean for customers in terms of products and features?

Geir: For customers that make HD a priority, this acquisition simplifies their choices. With the MCU 4500 we now have a full HD solution with full transcoding. We already have more HD endpoints installed than any other provider and we now have the only fully HD enabled infrastructure.

When it comes to the Codian MCU 4500 vs. the MPS, there are different scenarios for when each product is best and in the end it is a customer decision. We are continuing to support both and our sales people are incentivized no matter what choice the customer makes.

There are immediate enhancements to the TANDBERG product line. TMS will support Codian and working with Codian will extend and strengthen our vendor-agnostic approach. In our labs we are making sure that our products are tested and can be integrated with other vendors.

No doubt this relationship will enhance our ability to develop endpoints and infrastructure and create solutions for unified communication. The VCS is an important first step for us in call control and we will be working on new ways to join more parties over video and audio.

Codian also has some interesting products for the SME space and the education market. This acquisition should introduce some TANDBERG customers to new products and Codian customers to other aspects of a full solution.

David: We are continuing with the core strengths of the Codian products including being endpoint agnostic, ease-of-use and outstanding video and audio quality. We want TANDBERG infrastructure to be the natural choice for all video and audio communications. As well as enhancing and developing the current Codian products, we will be building on strengths of the TANDBERG product lines and technology, to deliver complete, best-of-breed, integrated solutions.

A short term example of product benefit is the support of Codian products by TMS which has long been requested by Codian customers. We also have large customers who are using the Codian MCU, TANDBERG Gatekeeper / VCS and TANDBERG endpoints - now that we are one company, this is a solution that we can more aggressively develop and support.

Geir has already mentioned the combination of TANDBERG’s HD endpoints and the Codian MCU 4500, which have always worked well together and now give TANDBERG the only true HD solution. This is also the only equipment which can work seamlessly with a mix of HD and the install base of SD equipment.

Q: How are the Codian and TANDBERG partner networks being integrated?

Geir: Most of the Codian partners are not currently TANDBERG partners. Currently, for all partners it is business as usual. Over the next few months we will be sitting down with them to determine which ones will offer the full TANDBERG product-range. There is no automatic access. Those that do offer the Total Solution will have access to training and can become fully certified as part of our Envision program.

David: Codian partners continue to sell the Codian product line - business as usual - and we are providing the same support and service that we did as Codian. We want TANDBERG infrastructure to be the natural choice regardless of the endpoints used and the Codian products will be sold and supported alongside non-TANDBERG endpoints.

By having best-of-breed endpoints and infrastructure the combined TANDBERG solution is a world-beating combination. The full TANDBERG end- to-end solution will be the most compelling in the market. However, as the video conferencing market expands and matures it is important that customers have a true choice and can install mixed environments with confidence. In line with being endpoint agnostic this is something that we will very much support.

What this means for Codian partners, is that they have the opportunity to expand and offer more choice to their customers. For some Codian partners, the acquisition will cause concerns and conflicts. However, TANDBERG will work positively with them to map out the future. As Geir says, access to a wider TANDBERG product range will be discussed individually with each partner.

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Video Conferencing Company of the Year

TANDBERG wins Frost and Sullivan award

TANDBERG has been named recipient of the 2008 Frost & Sullivan Global Video Conferencing Company of the Year Award for its excellence in product innovation as well as market execution that has accelerated the adoption of video conferencing.

"Showing strong operating fundamentals, TANDBERG continues to aggressively address new and emerging areas of opportunity in its core video communication business," said Roopam Jain, Principal Analyst at Frost & Sullivan. "TANDBERG has seen impressive top line growth in recent years, reflecting its market leading innovation and strong sales execution."

The Frost & Sullivan Award for Company of the Year is presented each year to the company that has demonstrated unparalleled excellence within its industry. The award is based on numerous factors, including the company’s business development, competitive strategy, customer satisfaction, and leadership within a particular Frost & Sullivan Industry Research Group (IRG).

Through the first nine months of 2007 (January to September), TANDBERG revenues reached $437.6 million, growing 51 percent year-over-year. In 2007, TANDBERG also increased its market share standing to become the number one provider of video conferencing endpoints and infrastructure products. According to Frost & Sullivan, TANDBERG has strengthened its position in the market by broadening its portfolio at both the high end and low end.

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TANDBERG Survey Links Green Reputation and Brand Value

Over 1 billion consumers prefer green companies

As the green movement gains momentum, TANDBERG set out to measure the brand value that results from increased corporate environmental responsibility. We teamed up with research firm Ipsos MORI to test global attitudes in 15 different countries. In particular, we examined how companies’ efforts to become more environmentally responsible are perceived by both their customers and their own employees.

The result is one of the largest global research projects into consumer attitudes toward climate change and its impact on corporate brands that has been conducted to date. Released this October, the survey included respondents in Australia, Brazil, Canada, China, France, Great Britain, Germany, Italy, Japan, the Netherlands, Norway, Russia, Spain, Sweden and the United States, representing two billion people worldwide.
Read the full survey to see how your country fares.

IMPACT ON BRAND VALUE

We found that over half of all consumers prefer to purchase goods and services from an organization that is considered environmentally responsible. That represents over one billion people worldwide. Could that type of affinity help your company?

In addition, 80% of workers worldwide prefer to work for an organization that is green. What does that mean for your company’s competitive advantage? It means better access to talent when you are hiring, better staff retention and higher employee engagement.

WHERE IS THE TARGET MARKET?

This study held some surprises for us. As you’d expect, countries like Australia and Sweden – with very green reputations in general – ranked very high in terms of peoples’ engagement on environmental issues.

But, in almost every indicator, it was the Chinese population that came out as extremely concerned with environmental issues. 67% of respondents in China prefer to purchase from a green company. 84% want to work for one. This is something to be sensitive about for any company that is looking to do business in China.

In fact, in each country we surveyed, going green seems to be much more of an attitude than a demographic. You can’t say, for example, that the U.S. target market is based on the West Coast, of a certain age range or gender.

Concern with green is something that cuts across our usual ways of thinking about our target markets. We should be aware that our customers, our employees, our partners, are all thinking about this issue on a variety of levels.

WHAT CAN WORKPLACES DO?

Twelve percent (representing almost a quarter of a billion people in the 15 markets) are calling on corporations to take the lead when it comes to limiting the effects of climate change. This figure was highest in Germany, Italy and the United States (all 20%). What steps should corporations take to respond to this call?

THE ROLE OF VIDEO

Over one fifth of respondents (21%) believe that travel reduction policies would be an effective means of reducing their company’s carbon footprint, and a further 18% think that working from home programs would be a good environmental initiative for their workplace.

As a champion for video in your organization, you have the ability to implement programs that have wide-scale impact on your carbon footprint. Together we can get more people in our organizations excited about video’s environmental contribution.

How can you measure the impact of your video program toward your company’s environmental goals?

• We’ve set up a site, www.seegreennow.com, that is devoted to helping you measure your current travel impact and understand how you can reduce it. There are calculators on this site to measure each individual trip you take as well as the full travel footprint of your organization.
• We are also in the process of adding a green calculator to the TANDBERG Management Suite, so that your emissions savings can be automatically calculated with each call.
• Our team is happy to sit down with you and work through some calculations to build the case for video’s contribution to reducing the CO2 emissions of your company.

Let us know how we can help!

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How to Measure ROI

The Exelon example

If you are analyzing the payback on your videoconferencing investment, this joint Forrester-TANDBERG study provides a detailed measurement framework to follow.

One of the United States’ largest utilities, Exelon installed over 80 video units across its organization during a five year period. Approximately 20% of employees have access to video and have used it to speed internal decision-making, improve training access, and work more closely across distant locations after a recent merger.

Using its Total Economic Impact methodology, Forrester Research investigates the costs, benefits, risks and flexibility of implementing the TANDBERG solution. In the analysis, Forrester takes into account costs of hardware and maintenance, planning, installation, and ongoing support.

Read the full study to see how measurement results in a five-year ROI for Exelon of 37%, with a breakeven point (payback period) of 2.22 years after initial deployment.

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One Number to Reach Them All

FindMe simplifies communication

You dial the video number, you connect, and…find only an empty chair. No way to leave a message. You hang up, try the desk phone. No luck. Cell phone? Home phone? Finally, you connect! You can now eliminate this wasted time with the unique FindMe™ application in TANDBERG’s Video Communication Server.

The number of people working from home and on the road is growing. The time you waste tracking them down is growing as well. FindMe offers everyone in a video infrastructure the ability to have their calls forwarded to multiple devices so that they can stay connected no matter where they are. This allows callers to dial one number to find the person they need to reach, without having to dial separate devices with separate numbers and leave multiple messages.

FindMe’s simple user interface allows users to choose up to five devices to forward their calls when their FindMe address is dialled. A user can also set an additional five devices to ring if there is no answer or if a device is busy.

Users that are part of team that shares calls can set Find Me to call multiple devices at the same time, improving customer service and response time.

Learn more about FindMe and the TANDBERG Video Communication Server.

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