BTwatch issue 2008.01

20 February 2008

BT GROUP: BT announced its long-serving Company Secretary, Larry Stone, is becoming President of Group Public and Government Affairs. He will be replaced by Andrew Parker. Robin Pauley, President of European Affairs for the Group, is to retire, and Stone looks set to take over his responsibilities. [p.2.]

BTwatch

Issue: 2008.01
Covering: 21 December 2007 to 18 February 2008
Published: February 2008
Next issue: March/April 2008

Mapping the maze of the UK’s largest telco. A unique monthly report for the industry.

Summary
Extract
Table of Contents
Index

SUMMARY

BT was named as an official tier-one sponsor of the London 2012 Olympic Games, apparently seeing off Orange in the process. [p.2.]

STRATEGY & OPERATIONS: Both new Chairman Sir Michael Rake and Chief Information Officer Al-Noor Ramji, gave their opinions on the future of BT, with Rake looking for more emphasis on “the customer service thing”, and Ramji also discussing the challenges of creating a different mindset within BT. [pp.4-5.]

BT signed a memorandum of understanding with Infosys, which will see the companies developing research and innovation projects together. Digital Fuel is to provide SLA management across BT’s global business; and BT is also deploying OSS solutions from Subex across its systems. BT is to work on mobile projects with service management company Motive and subscriber platform provider Blueslice Networks. [pp.6-8.]

BT RETAIL: BT updated its tariffs for retail customers, and drew attention to its introduction of free weekend geographic calls on its cheapest price plan. BT is making an effort to encourage its Option 1 customers to sign new twelve-month contracts, with the “carrot” of free evening calls. The “stick” is the alternative of removal of the 4.5p price cap for evening calls, with a 1.5p per-minute rate and 6p set-up charge introduced in its place. Extra charges for non-Direct Debit customers are being increased again, and BTwatch wonders if the company is repeating reputational mistakes of the past. [pp.9-10.]

There were reports of the death of BT’s Fusion FMC device in the wake of poor sales. While the reports were exaggerated, BT did confirm it is stopping marketing to consumers ahead of the launch of a new “BlackBerry-style” service in coming months. BTwatch considers that this might represent BT’s last chance to develop a workable consumer mobile strategy. [pp.11-13.]

BT trumpeted a partnership with Microsoft that will see elements of the BT Vision broadband television service made available to BT Broadband customers who use an Xbox games console. BT also reached supplier agreement for its next-generation set-top boxes for the Vision service, with Motorola replacing Philips. BT highlighted that Motorola is providing HD-capable equipment, even though it had previously said existing boxes are HD-ready, and it is unlikely that BT’s network will be equipped to carry high-definition pictures in the near future. [pp.14-15.]

BT Business announced the launch of Communications Complete, a new unified communications solution for SMEs, designed in collaboration with Cisco. BT Web Expenses was also launched, which is a rebadged Signifo solution intended to help small businesses manage employee expenses. BT Business deployed SalesGenius, a sales productivity offering, which it hopes will enable it to more effectively target its most profitable customers. [pp.17-18.]

BT acquired Fresca, a UK retail e-commerce service provider, and will integrate the company’s platform into its BT Expedite retail services unit. BT also acquired Square Mile Marina, a small operator of Wi-Fi access services at coastal and inland marinas across the UK. [p.19.]

BT GLOBAL SERVICES: Geoservices, a French oil company, awarded BT a contract to deploy and manage a contact centre solution. BT won a £1.3m contract to design a new intranet for Network Rail and will have the opportunity to bid for the contract to build and manage it. BT is to build MPLS-based networks for Valentino Fashion, marine contractor Van Oord, and a Dutch government body. It has also linked with Cisco for an IP telephony communications contract for Cambridge University. [pp.21-23.]

BT is to use picture archiving and communications system products and services from Sweden’s Sectra, to support its work with the NHS in London. BT announced a five-year contract to provide unified communications to the Worcestershire health community. It will also provide a new core WAN to Lincolnshire County Council. [pp.24-25.]

Voice Continuity, a new business continuity service, was launched by BT Global Services, and an update to the MobileXpress remote access offering was also announced. [pp.25-26.]

Comsat International, the BT-owned satellite operator, won a £17m contract to provide communications in remote areas of Colombia. [p.26.]

BT heralded the launch of its converged mobile services in Spain, and announced plans to expand its consultancy business in Belgium. The telco is also working with Level 3 to expand backbone network capacity in Central and Eastern Europe. [pp.27,29.]

BT WHOLESALE: BT named Trudy Norris-Grey as Managing Director for Strategy and Transformation at BT Wholesale, where Chief Executive Sally Davis outlined the division’s strategy for the coming year, which focuses on managed services and taking advantage of 21CN offerings as they come online. [pp.30,33.]

An 18-month programme to migrate high-volume broadband customers to a new diagnostic repair system was completed, enabling Wholesale’s customers to link their own back-office systems directly to BT. [p.31.]

Scottish and Southern Energy was named as BT Wholesale’s latest managed services customer, with BT to support the launch of new communications services from the utility this summer. [p.32.]

OPENREACH: Openreach promoted its consolidated Ethernet repair centre, and highlighted the deployment of a new fibre network at a 10,000 home residential site in Ebbsfleet, which it says is a first for the company in the UK. Meanwhile, the government took steps to cool speculation that it might force BT to deploy fibre across the country. [pp.34-36.]

The Office of the Telecoms Adjudicator claimed the number of unbundled lines was set to pass the four million mark and, while Openreach is improving on its KPIs, there is still work to be done by the access services business on meeting its obligations. [p.37.]

REGULATORY: Ofcom published a review of the leased-line market in the UK and recommended loosening of BT’s obligations, although finding the company maintains significant ‘market power’ in many leased-line markets. [p.38.]

RESULTS: BT announced changes to the way it presents its results, following the recent reorganisation. With BT Operate and BT Design now operating as cost centres, BT says the profitability of its lines of business is more visible; the re-stated financials certainly made clear the task facing Global Services in reaching its 15% EBITDA margin target. [pp.39-40.]

The spotlight was off BT Global Services with the presentation of BT’s Q3 FY08 results, with falling revenue and profit at BT Wholesale causing the company struggle to reach even the floor of its financial targets for the period — leading to investors taking fright. [pp.41-43.]

EXTRACT

STRATEGY

BT Chairman Rake on the company’s future

BT published a number of quotes from Sir Michael Rake, the Group’s new Chairman, providing his taking on the role, and his ambitions.

While on the whole the comments reflect the usual business platitudes, there are a number of points where by reading between the lines, it is possible to see how the Rake chairmanship could develop.

Rake identifies “the customer service thing” as BT’s main challenge. He says it is important to focus on this wherever the company is operating and across all lines of business. He also said the focus is important “regardless of reporting lines”, indicating that BT’s organisation might still be viewed as overly bureaucratic.

Rake also talked about BT’s culture. Rather confusingly, he praised BT’s efforts to transform itself globally, but also pointed to the company’s history as a UK business. When he went on to call for an “open and consistent set of values and behaviours around the world”, it was not clear to BTwatch whether he was calling for the export of UK attitudes to the rest of the business, or for UK operations to change their outlook to reflect progress made by BT internationally.

Success, in Rake’s view, would be about making “enormous strides and progress” in customer service and “reliability in the retail level”. He considered that achieving this would enable the company to improve its “cash, operational, and margin capabilities”. Putting these points together, BTwatch considers that Rake’s priorities could point to more rapid progress on cutting employee numbers to improve management focus on clients and sales — something that is further advanced in BT’s international operations than it is at home. BTwatch has also called on BT in the past to focus more on its UK retail business, and it would appear that the new Chairman could be of a similar view, which may see a ‘back to basics’ approach to the fundamentals of the business.

Rake quotes in full

” This ‘right first time’ customer service thing is hugely important in a big organisation globally. And we’ve got to really be able to ensure that we get the customer thing first and foremost in our minds — regardless of geography, regardless of the line of business, and regardless of reporting lines. “

” The main issue [about being global] here is cultural. We have here in BT a great organisation, a great history. Particularly in the last five or six years, BT has completely transformed itself and moved globally. Clearly, the biggest part of BT is in the UK. Its history in that sense, its immediate history, has been in the UK. So I think the key is about having an open culture — an open and consistent set of values and behaviours around the world. “

” I think really good [success] would look like BT having made enormous strides and progress in customer service and reliability in the retail level. Having dramatically improved its cash, operational, and margin capabilities, returns to its shareholders and to its people as a result of doing that. “
– Sir Michael Rake.

[BT, December 2007.]

Ramji on BT’s IT transformation and services

Al-Noor Ramji, BT Group Chief Information Officer (CIO), and Chief Executive of BT Design, was interviewed by CXO magazine and discussed BT’s overhaul of its IT processes since his appointment with the company, and the efforts to take a similar approach in the transformation of BT into a professional services company.

In the interview, Ramji was positive about the creation of BT Design and BT Operate to manage the company’s network and development outside the traditional lines of business. With BT Design responsible for innovation, Ramji said that the introduction of standardised architecture and re-useable components has meant that resources can be focused on value-add elements. Once systems are up and running, BT Operate is able to manage the networks, IT and processes that they use. Apparently, this division of labour and concentration of resources into two companies has significantly reduced the number of hand-offs present in business processes, which has led to faster delivery of more reliable products at lower costs, according to Ramji.

Ramji also discussed the challenges of changing the mindset at BT, based on the legacy of its employees joining the company “not to have a risky life”. The key to changing attitudes was said to be tapping into the pride that BT’s employees feel about working for the company.

Ramji said the company’s operations had been “re-engineered into three customer experiences”, which amount to “selling things, fixing things, and inventing things”.

The CIO also discussed his efforts to simplify the IT systems used within BT, with efforts underway to reduce the total from 3,500 applications (the figure in 2004), to just 14 combinable systems. Ramji claims this will provide considerable savings for the company, and, as long as the company is aggressive in its strategy and does not “pussyfoot around” replacement of aging infrastructure with new kit, can break-even within the course of a financial year.

Since Ramji has been with BT, the company has identified Google as potentially one of its major competitors (BTwatch, 2006.05), and Ramji reiterated the belief that the internet company will increasingly operate in areas in which BT is also active.

Ramji quotes

” I have a fairly broad remit, with leadership responsibilities for our customer experience pan-BT, as well as BT Design. I wouldn’t be able to tell you where one role begins and another ends. “

” We have a history of very long service, very decent professional people. On average, they’re probably in their late-40s and they’ve mostly joined BT not to have a very risky life. So, the first thing to do was to really appeal to their sense of corporate mindedness. We told them that the future of BT relied on their transformation as individuals. That really kick-started the whole process because there was a lot of pride in being people in BT. “

” When we launched this [transformation programme] two years ago we realised that Google would definitely come into the consumer space and offer phone services, video services, and all sorts of other software products that we wanted to offer…We also thought that the bigger threat always came from companies with the biggest human capital assets or with just bundles of money — that’s really why we put Google in the picture. “
– Al-Noor Ramji.

[CXO, January 2008.]

2 BT Group
2 Executives; Marketing
3 Acquisitions and disposals;
Property
4 strategy and operations
4 21CN; Strategy
6 Partners and suppliers
9 BT Retail
9 Broadband; Fixed-line
11 Fusion
14 Vision
16 Digital home
17 Business
18 Devices
19 Expedite; Openzone
21 BT Global Services
21 Acquisitions and disposals;
Contracts
24 NHS contracts
25 Products and services;
Public sector
26 Americas
27 Europe
28 Asia Pacific;
Global Financial Services
29 Awards and accreditations;
Partners
30 BT Wholesale
30 Appointments;
Customer service
31 Broadband
32 Contracts
33 Strategy
34 Openreach
37 OTA2
38 Regulatory
39 Results
42 City reports
44 INDEX

INDEX

A
Alcatel-Lucent, 28
Analysys, 13
Atlantic-ACM, 29
AXE ECN, 28
Axos Capital, 3
B
Bain Capital, 3
Blueslice Networks, 7
British Broadcasting Corporation, 13
BSkyB, 42
BT Group, 2, 3, 5, 6, 12, 39, 40, 41
BT Global Services, 3, 8, 21, 26, 28, 29, 39, 40, 41, 42, 43
BT Americas, 26
BT Asia Pacific, 28
BT Benelux, 23, 27
BT Germany, 27
BT Health, 24
BT iNet, 22
BT International, 26, 27, 28
BT Italia, 22
BT Spain, 27
Comsat Mobile Communications, 26
MobileXpress, 26
Net2S, 21
Spain, 26
Voice Continuity, 25
BT Retail, 2, 9, 10, 12, 16, 19, 39, 40, 42, 43
BT Broadband, 11, 14
BT Business, 17, 18
BT Consumer, 10, 18
BT Expedite, 19
BT Fusion, 6, 11, 12, 13
BT Government, 25
BT Home IT Support, 16
BT Mobile, 26
BT Openzone, 19, 20
BT Redcare, 38
BT Vision, 14, 15, 41, 42
BT Web Expenses, 18
Communications Complete, 17
Option 1, 9
Option 2, 9
Option 3, 9
Together, 9, 14
Unlimited Anytime Plan, 9
Unlimited Evening & Weekend Plan, 9
Unlimited Weekend Call Plan, 9
BT Wholesale, 8, 30, 31, 32, 33, 39, 40, 43
White Label Managed Service, 32
Directors
Rake, Sir Michael, 4
Executives
Alvarez, Luis, 26
Bruce, Chris, 19, 20
Cavestany, Jacinto, 27
Davis, Sally, 30, 32, 33
De Coster, Michel, 23, 27
Evans, Tim, 3
Geldmacher, Jan, 27
Hill, Stuart, 24
Huddleston, Steve, 3
Kim, HJ, 28
Lalani, Hanif, 39, 40, 41
Livingston, Ian, 2
Ma, Allen, 28
Man, Richard, 28
Marks, Dan, 14, 15
Morgan, Peter, 2
Murphy, Bill, 17, 18
Narang, Sudhir, 28
Norris-Grey, Trudy, 30
Parker, Andrew, 2
Patterson, Gavin, 10, 18, 19
Pauley, Robin, 2
Pol, Chuck, 28
Quartermaine, Mark, 25
Ramji, Al-Noor, 5
Robertson, Steve, 35
Sanderson, Emma, 16
Sciolla, Corrado, 22
Slaven, Helen, 19
Stanton, Ray, 25
Stone, Larry, 2
Verwaayen, Ben, 2, 12, 34, 41
Ex-executives
Danon, Pierre, 12
Openreach, 33, 34, 35, 37, 38, 39, 40, 42
EMP, 37
WLR3, 37
Strategy and Operations
21CN, 4, 8, 23, 33, 38, 42
BT Design, 5, 31, 33, 39
BT Operate, 5, 33, 39
C
Carillion, 3
Carphone Warehouse, 42
Cisco Systems, Inc., 17, 22, 28
Collins Stewart, 43
Compartel, 26
Credit Suisse, 13
Customer Service Direct, 26
D
Deutsche Telekom, 3, 27
Magyar Telecom, 3
T-Mobile, 33
Digital Fuel, 7
Disney-ABC International Television, 14
Dutch Directorate for Public Works and Water Management, 23
E
Eastman Kodak, 30
European Commission, 27
European Union, 2, 23, 25, 27

F
France Télécom
Orange, 2
Freeview, 14, 15
Fresca Limited, 19
G
Genius.com, 18
Geoservices, 21
Google, 5
H
HCL, 6
Hilton Group, 20
HTC, 11, 27
I
Infosys, 6
Institute of Public Finance, 26
International Securities Exchange, 28
Investec, 43
J
JPMorgan Chase, 42
K
Kantar Group, 3
Millward Brown, 3
L
Land Securities, 35
Lehman Brothers, 42
Level 3 Communications, 29
Lincolnshire County Council, 25

M
Mediaedge
cia, 3
Microsoft, 14, 15, 19, 24
Xbox, 14
Monteray, 3
Motive, 6
Motorola, 15
N
National Health Service, 24
NATO, 23, 27
Network Rail, 21
NGCC, 21
Nokia, 27
Nomura, 42, 43
Nortel Networks, 24
O
Ofcom, 35, 38
Carrier pre-selection, 37
LLU, 37, 41, 43
Strategic Review of the Telecoms Sector, 33, 38
Wholesale line rental, 37, 42
Office of Government Commerce, 25
Office of the Telecommunications Adjudicator, 37
OTA2, 37
OGCbuying.solutions, 25
Olympic Games, 2
Oracle, 30
Ovum, 13, 33

P
Post Office, 33
Publicis Groupe, 3
R
Radianz, 28
Raya Holding, 3
Research In Motion
BlackBerry, 11
S
Samsung, 27
Scottish and Southern Energy, 32, 33
Sectra, 24
Shepherd Neame, 20
Siemens, 7
Spirit DSP, 4
Square Mile Marina, 19
Subex, 8
Sun Microsystems, 30

T
Technologies
3G, 23
ADSL, 9
Broadband, 6, 9, 10, 11, 13, 16, 17, 26, 27, 31, 32, 33, 35, 36, 41, 42, 43
DSL, 41
Ethernet, 23, 33, 34
GPRS, 23
ICT, 23, 24, 25
IP, 17, 21, 22, 23, 24, 26, 27
IPTV, 14, 15
MPLS, 21, 22, 23
Private circuits, 38
Wi-Fi, 12, 19, 20, 23, 24
Telekom Slovenije, 3
U
University of Cambridge, 22
UWV, 23

V
Valentino Fashion Group, 22
Van Oord, 23
Virgin Media, 33
Virgin Mobile, 33
Vodafone, 12
W
Worcestershire Primary Care Trust, 24
World Economic Forum, 2, 12
X
Xbox, 14
Y
Yahoo!, 19

Written by AB · Filed Under KnowBT

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