AT&T Taps Software and Diversity Suppliers to Transform Its Network by 2020

June 1, 2016

Control and virtualization with software take center stage in AT&T’s plans for network transformation. Along the way, the company intends to spend increasing amounts with diversity suppliers.

By Don Bishop

AT&T is well on its way to becoming a software company, according to Susan Johnson, vice president of the company’s global supply chain. Johnson has responsibility for planning, sourcing, buying and contracting, along with back end warehousing, transportation and logistics. She spoke at the Wireless Infrastructure Show in Dallas on May 24. Johnson said AT&T is transforming its network from hardware-centric to software-centric, using software-defined networking and virtualization of many network functions. The shift is intended to help AT&T meet a surging demand for customer data stemming from growth in all of the services that feed on network connectivity.

AT&T has committed itself to virtualize and control 75 percent of its network with new software-defined architecture by 2020. Johnson said AT&T surpassed an interim goal in 2015 of virtualizing more than 5 percent when it achieved 5.7 percent network control and virtualization with software. In 2016, the interim target is 30 percent.

“It all starts with the network architecture,” Johnson said. “We’re moving more functionality into software that’s not tied to proprietary hardware. Hardware will be more homogeneous and more commoditized. We’re moving our network functionality into the software with a drive for more interoperability and standards. This puts us in a more agile development position for faster upgrades and response times to our customers’ needs.”

Johnson said that software can be more interoperable, modular, portable and usable across many service providers. “This changes everything we do,” she said. “It changes how we source, and it changes who we source from. We’re moving to more open source software, and we’re moving to source from software providers that we haven’t worked with in the past. That’s changing the flexibility of how we design our network and how we respond to customer needs. It’s a major shift for the industry and a major change for our vendor community, which we need riding along with us on the software-defined networking journey.

“It’s crucial that our diverse suppliers make this pivot along with us,” Johnson said. She said AT&T defines diverse suppliers as minority-owned businesses in four categories: women-owned businesses, service-disabled veteran-owned businesses, and lesbian, gay, bisexual and transgender (LBGT)-owned businesses. She said the category of LBGT-owned businesses is new for AT&T in 2015. “All of these businesses bring unique value in their services,” she said.

“We have a four-pronged approach for diversity at AT&T,” Johnson said. We focus on it with our employees and our communities. By definition, our customers are diverse, and so are our suppliers. With our employees, we hire diverse candidates with a special focus on hiring veterans. In our communities, we want to improve the education level across AT&T by spending money and volunteer time to improve the high school graduation rate. We know we will need more skilled workers at AT&T during the next 20 years.”

Johnson said AT&T wants its suppliers to mirror the diversity of its employees and communities. The company set a 2015 objective of spending 21.5 percent of its purchasing budget with diverse suppliers. In 2015, AT&T spent $13.7 billion with diverse suppliers, equating to 24 percent, beating the objective. She said if spending by DirecTV, which AT&T acquired last year, were included, the figure would exceed 24 percent.

Supplier diversity is nothing new for AT&T; Johnson said the program started nearly 50 years ago. In 1989, the company started a prime supplier program in which AT&T requires prime or direct suppliers to subcontract their business with diverse suppliers. “Results show that prime suppliers have been critical in helping us bring more diverse suppliers into the supply chain,” she said. “People in my organization’s supplier diversity team work with prime suppliers to create detailed plans on how to incorporate diverse suppliers into their supply chains and help them to set meaningful goals to use diverse suppliers as subcontractors.”

As AT&T shifts toward software-defined networking, Johnson said the company seeks diverse suppliers for software development, site testing capabilities, network services and virtualization of network functions, along with advertising. “All of these are essential for AT&T to become the premier integrated communications company,” she said.

“Not only do we want to work with diverse suppliers, but also we want to create opportunities for diverse suppliers to expand and grow their operations and skills and improve their opportunities to win new business,” Johnson said. “We have programs to help them scale and grow with us and to find other customers, so that they are not overly reliant on AT&T.”

AT&T offers scholarships to fund executive entrepreneur training at major universities. In 2015, the company awarded six scholarships to diverse-owned business executives to study techniques and operational excellence through lectures and expert coaching to build capacity and sustainability.

A business growth acceleration program provides education and mentoring to help diverse enterprises improve operations and their ability to earn corporate contracts. Working through JFK University’s entrepreneur leadership program, AT&T offers a seven-month curriculum of classroom time and mentoring. “We pair students with mentors who have been successful entrepreneurs in fields related to theirs,” Johnson said. “Any diverse business owner can apply for the program.”

Since 2011, 877 diverse business owners have graduated from the business growth acceleration program, and 80 percent of them have since grown their businesses’ revenue.

AT&T also created opportunities to expose diverse suppliers to prime suppliers. “It’s a little bit of what we call matchmaking,” Johnson said. “One is a ‘Meet the Prime Supplier’ event with almost virtual dating sessions. We also started a virtual matchmaking event, which is an online tool where current and prospective diverse suppliers can register. Based on their capabilities, they will be matched with prime suppliers for subcontracting opportunities.”

Johnson said AT&T needs innovative suppliers to help it become more efficient and meet customer demand. “No one supplier can meet all of our needs,” she said. “If you are a supplier to AT&T, we need you to collaborate and cooperate with other suppliers. We need strong integration. Whether you’re doing a back-end solution that is serving logistics or whether you’re driving something on the front end, that tool or service has to be integrated with our other suppliers. We wouldn’t be anywhere without suppliers that are delivering strong quality, reliability and availability.”