Overview of the JDS Uniphase (JDSU) portfolio
A leading provider of optical products and test and measurement equipment for the communications industry, JDSU produces technologies that enhance people’s lives every day.
JDSU’s property portfolio spans 2.5 million square feet in 80 countries and enables it to focuses on the research and development, sales and service of innovative technologies. Over the years, the company has remained agile by identifying synergies with newly acquired companies and having competitive “go to” market strategies.
Terry Wood, Vice President of WorkPlace Solutions, joined WorkPlace Now to discuss JDSU’s real estate strategy, the technology market, and what’s on the horizon.
How has the role of real estate changed in the JDSU portfolio?
During the telecommunications boom of the late 1990s, real estate made such a small impact on margins, but with drastically changing revenue, it has become more of a game changer. The real estate portfolio is critical today, as it represents a huge impact to margins. There is pressure to adapt flexibly to changing business environments, and as an organization, we are doing what we can to show stakeholders that we will align with and support the business. We’ve created a model as flexible as possible to both grow quickly and downsize just as rapidly.
What sparked the decision to outsource?
Outsourcing has been the solution to support changing market conditions for JDSU for a while and its first generation outsourcing relationship began many years ago with real estate. We quickly realized that we were behind the curve with facilities management (FM) and couldn’t respond with the speed required to keep pace with the ever changing needs of the business.
In 2010, we brought in Johnson Controls to manage facilities and project management. JDSU has a complex portfolio – small, globally distributed and has environmental demands that don’t make it attractive to a third party. In Johnson Controls we have found a strategic partner that can move our portfolio forward with its global infrastructure and technical expertise.
How has the relationship with Johnson Controls GWS evolved?
The success of an outsourcing partnership relies on a number of factors, but most importantly personal relationships and agility. Relationships play a huge part. You have to rely on outsourcing providers to come to the table and work side-by-side for it to be successful for both parties. JDSU ensures that its Alliance Director has a seat at the table and, in turn, Johnson Controls must be capable of not only listening, but also coming up with ideas to execute successfully and consistently. In the end, it’s not so much the technical expertise at the Alliance Director level as it is the relationship and communication skills.
Additionally, given the uncertainties in the global economy, a service provider must have the ability to respond quickly, deal with risks, acts of nature and disruption to the supply chain etc.
We’re all facing similar demands and challenges, but need to flexibly operate to demonstrate ongoing value.
Johnson Controls has responded positively and received recognition throughout JDSU for the success of this outsourcing program. Most recently, they led the successful project management and seamless change of six sites in APAC.
What are some unique aspects, and considerations, of operating in the technology market?
The technology market evolves faster than other industries. JDSU is expected to rapidly move on a quarterly basis. Although real estate can be slower to respond, we do everything possible to impact those margins one quarter out.
We provide as much flexibility as possible through our leases, while balancing the risk of rising rental rates, through short-term leases, from two-to-five years, positioning the company to be more agile. We then leverage that speed globally to take advantage of emerging markets and new business opportunities.
From a consumer perspective, customers want great technology and for it to be as inexpensive as possible, which ultimately puts pressure on FM spending and the moves we make.
Because it changes so rapidly, how does JDSU innovate?
Going into the recession, our CEO recognized the challenge of competing in a competitive global market with ever increasing pricing pressures.
The industry is all about price, as long as you can deliver on quality. JDSU has significantly increased its research and development (R&D) initiatives and investment in new products. In fact, we set and delivered on a goal for two major divisions that more than 50 percent of their revenue be from products are less than two years old.
If we continue to drive innovation, competitors can’t keep up. There’s always pressure on R&D, but we don’t rest and continue evolving. JDSU is targeting new markets and working more closely with providers to deliver a more complete module and deliver innovative products to our customers. Just last week, JDSU introduced PacketPortal, a technology that redefines customer, content, and network intelligence.
Looking ahead, what do you see as a challenge, and as an opportunity, for 2012?
A key challenge is that we don’t have visibility beyond one quarter and we need to respond, however, the market moves to macroeconomic uncertainties. While we can plan to hit a specific revenue and push to get there, we need to turn just as quickly.
The opportunity is similar to the challenges – variables beyond our control. Our real estate organization is deeply engaged in risk management for the company. We have the experience, and are making the investment, to provide risk mitigation for acts of nature and global economic events. Little steps to mitigate risk and potentially significant expenses make an impact to our long-term success.
What advice would you give a first generation outsourcer?
Partner at the highest level of the RES organization and make sure the service provider truly understands your business before making an offer. Without full knowledge and disclosure, nobody wins. Sometimes outsourcing partners want to win for the sake of winning, and although they can effectively sell, they don’t know the needs of the customer. Be selective about who the service provider wants to serve, make sure they can serve and that they are truly a strategic partner, as opposed to a commodity provider. Back to top