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BT Innovate & Design Industry analyst roundtable Hosted by Clive Selley, CEO Agenda BTID: The engine room of BT Where we are today: delivering the enablers for growth Our transformation: getting from good to great Our transformation: IT platforms Our transformation: Network platforms

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agenda
Agenda
  • BTID: The engine room of BT
  • Where we are today: delivering the enablers for growth
  • Our transformation: getting from good to great
  • Our transformation: IT platforms
  • Our transformation: Network platforms
  • Research & Innovation
  • Q&A
where btid fits in
Where BTID fits in

Customers

BT Group

Ian Livingston

CEO

Tony Chanmugan

CFO

Alex Wilson

Group HR

Director

BTRetail

Gavin Patterson

CEO

BT GlobalServices

Jeff Kelly

CEO

BT Wholesale

Sally Davis

CEO

Openreach

Steve Robertson

CEO

BT Operate

Roel Louwhoff

CEO

BT Innovate & Design

Clive Selley

CEO/Group CIO

Market facing units manage all customer interactions. BT Innovate & Design researches, innovates, designs and develops.

BT Operate manages all systems and networks in life.

our organisation structure
Our organisation structure

ServiceDesign Units(vertical)

Innovation, design and development teams (horizontal)

Karl Penaluna

(acting)

bt innovate design the engine room of bt
BT Innovate & Design: the engine room of BT

How we work

Business outcomes

  • Increased right first time for customers
  • Significantly lower operating costs
  • Faster speed to market
  • Higher volume, better quality output
  • Rationalised logical IT platforms
  • A 21C IP core network
  • Platform-based structure
  • One way of working
      • The BT Operating Model
  • Underpinned by:
      • Enterprise programmes
      • Automation
      • Reuse and SDKs
      • Process re-engineering
      • System/network rationalisation
      • CIT
      • Virtualisation
  • Measured by:
      • Function points
bt innovate design delivering the enablers for growth
BT Innovate & Design: delivering the enablers for growth
  • Enabling the delivery of broadband based consumer services through fibre
  • Delivering the capability for BT to be the brand for businessin the SME market
  • Helping GS become a genuine global leader
  • Supporting BT Wholesale in becoming the Wholesaler of choice
  • Being the best network provider

Creating a world class cost base

wholesale service design underpins wholesale success
Wholesale service design underpinsWholesale success
  • Get things ‘Right First Time’ to be number one for customer service
  • Partner of choice for managed network services and IP platforms for Communications Providers globally
  • BTID is underpinning Wholesale’s key strategic priorities for 2010/11 and beyond
  • Operate in key markets with global connectivity and presence
  • Offer advanced software-driven platforms and services that exchange traditional and IP traffic
  • Delivering ‘content-rich’ broadband and ‘communications-rich’ services
  • Delivering sustainable, profitable future growth
openreach service design underpins openreach success
Openreach service design underpins Openreach success
  • Get things ‘Right First Time’ to be number one for customer service
  • BTID is underpinning Openreach’s key strategic priorities for 2010/11 and beyond
  • Maximise our Copper networkby continuing to standardise, simplify and automate
  • Deliver NGA to 4 million homesby December 2010
  • Reinforce core voice and broadband through differentiation
  • Deliver a new generationof communications servicesto our customers
portfolio service design underpins gs success
Portfolio & service design underpinsGS success
  • Get things ‘Right First Time’ to be number one for customer service
  • BTID is enablingBTGS to become a world leader in managed networked IT services and generate cash flow by:
  • having a world class portfolioand customer solutionswith global reach
  • underpinned with least cost network
  • and delivering greater productivity, efficiency and cost reductions
retail service design underpins retail success
Retail service design underpins Retail success
  • Get things ‘Right First Time’ to be number one for customer service
  • Standardise, simplify and automate to cut costs
  • BTID is underpinning Retail’s key strategic priorities for 2010/11 and beyond
  • Build a scale TV business exploiting BT’s broadband network
  • Reinforce core voice and broadband through differentiation
  • Build our SME IT business by enhancing our capabilities
building a scale tv content business
Building a scale TV & content business
  • BTID is supporting BT Retail in building a scale TV & content business which will exploit BT’s broadband network
  • Building HD capabilities in our national fibre network
  • Wholesale Content Connect, a nationwide CDN, will improve the cost and quality of TV and video content for all UK broadband customers (not just BT’s)
  • Through Project Canvas, working with broadcasters and telcos to re-define the next generation of free-to-air TV
  • TV & content services enable us to deepen our relationship with customers, driving retention and ARPU
  • Gives the customer a choice of bundled calls, broadband and TV from a single trusted supplier
  • How?
  • Why?
consumer tv propositions
Consumer TV propositions
  • BTID is supporting BT Retail in building a scale TV & content business which will exploit BT’s broadband network
  • Launched Sky Sports 1 and 2 on Vision in timefor Premiership Football season
  • Canvas
    • Horizontal market proposition – new model for IPTV
  • Linear TV
    • Making use of fibre investments to deliver improved content to customers
  • Gaming – Onlive
    • Using broadband infrastructure and cloud capabilities to enter £2bn market
  • Achieved already...
  • More to come...
our transformation journey
Our transformation journey

Continuous improvement

Increase standardisation

Gain control

Past

Present

Future

  • Formation of BT Innovate & Design and BT Operate
  • Strategic decision to converge networks and IT
  • Control development and support costs
  • Increase levels of standardisation, automation and reuse to drive consistent customer experience
  • Invest in future platforms
  • Global springboard for innovation
  • Global development and operations centres based on standard global platforms, automation and self service
our transformation journey people
Our transformation journey: people
  • Right skills
  • Up-skill programmes toconvert from legacy skills
  • Right people
  • Vendor management
  • Outsourcing whereappropriate
  • Focus on core work
  • Right places
  • Consolidating from 240 to 20-30 global servicecentres
  • Creation of 5development centres

45,000

27% over 2 years

40,000

35,000

30,000

25,000

Total labour resource

UK sub-con

20,000

Agency

15,000

Off-shore sub-con

Direct

10,000

5,000

0

2007/08

2008/09

2009/10

16

our transformation journey process
Our transformation journey: process

Innovate and decide

Design and develop

Deploy

In-life management

Strict demand

management

All BT’s products, services and contracts

Plan, build and deliver customer orders

Agile process, software reuse

Error free deployment

Driving improvement through measures

Viable business case

Cost/quality/ speed

On-time/cost/

quality/

scope at launch

‘Right First Time’/

Reliability

our transformation journey it platforms
Our transformation journey: IT platforms

Past

Present

Future

  • 24 standard global platforms
  • 8 strategic vendor partnerships
  • Produced 30% more software for the same cost
  • Launched over 500 reusable modules (SDK)
  • Fewer platforms using standard software modules
  • Continued YoY efficiency improvements
  • Automated, lean processes to reduce failure
  • Thousands of systems
  • Hundreds of vendors
  • Few measures
  • Complex models

Continual improvement of our systems estate

our transformation journey networks
Our transformation journey: networks

Past

Present

Future

  • Delivered and exploited the core IP/MPLS UK network
  • Ethernet - biggest UK footprint
  • High-speed broadband roll-out
  • Lower cost global access
  • Single global IP/MPLS network
  • Closing down legacy networks
  • Super-fast fibre broadband to 2/3 of the UK population
  • Content distribution network to support media
  • Multiple, disparate networks in UK and across the globe
  • Up to 8Mbps broadband
  • High-cost access solutions

Continual improvement of our global networks

platform approach becoming a platform based company is central to bt s strategy
Platform approach: becoming a platform-based company is central to BT’s strategyTransformation of IT systems
  • Delivery hubs for each LOB manage 90-day releases to the business
  • Efficiency is managed by quantity and quality of output
  • The metric is £ per function point and bug per function point
  • Efficiency has been achieved by reuse
case study reuse and 70 20 10
Case study: Reuse and 70:20:10

The issue

  • Existing marketing, billing and order journeys meant BT found it difficult to offer “bundled” propositions to its customers.

The solution:

  • Maximise the reuse of existing functionality
  • Enable the consumer channel to choose from a pre-defined set of building blocks (services, discounts, contracts, equipment, “bolt-ons”) which enables them to price for specific bundles

The benefit to BT Retail:

  • Agility in the market - Consumer now on an equivalent footing with major competitors in the consumer services space
  • Greater retention capabilities for existing customers (one contract for all services means customers are less likely to leave)
  • Converged order journey’s and communications with the customer about their multi-service order
  • Single line on the bill is easier for customer to understand

What does this mean for BTID?

  • Frees up resource to focus on “new” work and building new capabilities
  • Reduced cost of portfolio management (as Retail stick together pre-defined building blocks in different combinations).
  • New services will slot easily into bundles framework (already provedwith Fibre).
what we are delivering today
What we are delivering today

Improved customer experience

  • Focus on RFT in retail has reduced failure by c.60%over 2 years

Cost reduction

  • £700m reduction in cost base over the past 2 years

Out put

  • 37 % improvement in development unit cost over 2 years
  • 31% reduction in cost per test point over 2 years
  • 28% increase in software volumes in the past year

Quality

  • IT incidents reduced by 33%
  • Network incidents reduced by 23%
  • Average weighted outage impact reduced by 67%
  • Order lead times reduced by as much as 50%
the future becoming a world class business
The future - becoming a world class business
  • Platforms productivity currency: £/Function Point
  • Acknowledgement that we have improved but have some way to go
  • Our enhanced efficiency and platform maturity completion plans will take us to:
    • peer average within a year
    • first quartile within two years
    • further opportunities (2 years and over)driving to end-statewill take us beyondthe first quartile

2 year target

10/11 target

Source: Gartner benchmarking Q3 09/10, GP 10/11 target adjusted for 09/10 organisation

benchmarking bt s billing capability
Benchmarking BT’s billing capability

2008/09 (from report)

Latest view

BT

BT

Oliver Wyman Report

2011/12 (forecast)

2010/11 (forecast)

Dev.

Cost 27%

Dev.

Cost 18%

Revenue Billed

through platform

4.5%

Revenue Billed

through platform

6%

BT

BT

case study reducing call volumes through bill redesign
Case study:Reducing call volumes through bill redesign

Completed and implemented Q3 FY09/10

4 week rolling average: call volume fell from 77.5k to 44.5k over seven months

case study contracts sdk driving standardisation in btgs
Case study: Contracts SDK - driving standardisation in BTGS

Contracts SDK enables improve-ments across the contract lifecycle

Current state

New Business

We are investing £20m to uplift our core platforms to best practice and to drive standardisation. 70:20:10

We are leveraging this investment on over 50 of our largest accounts

We are taking advantage of standardisation globally

A movement to standard tooling will reduce our cost to serve existing customers

Significant reduction in the cost to implement our core systems estate for large & complex deals

This is real! We have delivered eight releases of functionality since November-09

  • Reduce the cost variance on new bids
  • Provide solutions to provide managed network services

Transitioning Customers

  • Implementation of tooling and processes to ensure customer take-on is successful

Transforming Customers

  • Implementation of a dramatically improved Account Startup Process
  • Configure – don’t build solutions onto our standard solutions stack

Customer Operations

  • Improvements in contract and commercial inventory and data
  • Lower cost operations environment achieved through automation and standardisation
case study supporting delivery of the kcom contract
Case study: supporting deliveryof the KCOM contract
  • In June 2009 KCOM Group PLC (KCOM.L) announced it had signed a strategic agreement with BT Group. The contract is valued at £960 million over ten years
  • What will it provide?
    • It will provide an extension of the KCOM network reach through access to BT's national network and outsourcing the management of its network assets to BT‘s Wholesale division
    • A full range of 20C data and voice products are being transformed into 21C futures products and services
  • What BTID is delivering for the contract
    • reducing the ongoing fixed costs and capital expenditure associated with the management of KCOM’s network infrastructure
    • retaining KCOM’s existing fibre access network, coupled with access to BT's network scale and service capability
    • Phased and controlled outsource of the management of KCOM's UK network operations to BT over the next few years
    • management, maintenance and enhancement of network operations
    • network management and vendor management on KCOM's behalf

“This agreement is an important step in the transformation of the KCOM Group.”

Bill Halbert, Deputy Executive Chairman

Allowing KCOM to focus on meeting the needs of its customers

platform maturity where next

Enough opportunity headroom for a world-class cost base:

Earlier requirements alignment to identify reuse

Reuse and SDKs

Automation: build and test

System rationalisation

Pan-BT single instances

Oracle migration and uptake

Continuous Integration Testing

Platform maturity – where next?
transformation network platforms

Transformation: Network platforms

George Nazi, president 21CN, global networks and computing infrastructure

let s talk about
Let’s talk about:
  • Our networks transformation
  • Extending our global reach
  • DHL – global contract example
  • Faster speeds and greater access for the UK – our next generation access and super -fast broadband programme
  • Fibre voice access
our networks transformation
Our networks transformation

Past

Present

Future

  • Delivered and exploited the core IP/MPLS UK network
  • Ethernet - biggest UK footprint
  • High-speed broadband roll-out
  • Lower cost global access
  • Single global IP/MPLS network
  • Closing down legacy networks
  • Super-fast fibre broadband to 2/3 of the UK population
  • Content distribution network to support media
  • Multiple, disparate networks in UK and across the globe
  • Up to 8Mbps broadband
  • High-cost access solutions

Continual improvement of our global networks

extending our global reach
Extending our global reach
  • Global demand for managed network services and unified communications
  • Asia Pacific – important for us, important for our customers
  • Network partnering - extending BT’s global reach through selective partnering:
  • creating revenue opportunities throughnew geographic markets - helping usto deliver US and Asia-Pacific network solutions in particular
  • minimising cost of market entrythrough network-to-network interconnections (NNIs)
case study dhl a global contract example
Case study: DHL – a global contract example
  • Five-year contract to consolidate DHL’s communicationsfrom multiple service providers to BT
  • Managed services solution in 15 countries, over 1,000sites across Asia Pacific
  • BTID has begun the migration of existing voice, data, optimisation and security services to MPLS
the mixed economy progress
‘The mixed economy’- progress

Super-fast broadband (Fibre)

Early summer

1.5m homes and businesses passed

Fast broadband (ADSL2+)

Ethernet

By London2012

10m homes and businesses passed

820 nodes deployed across the UK

Spring 2011

180 new nodes deployed

Late summer

2.5m homes and businesses passed

July 2010

2010

2011

2012

2015

End of 2010 4m homes and businesses passed

Spring 2011

20m homes and businesses passed (75% of UK)

(312 more exchanges)

55% of UK homes and businesses passed

(815 exchanges)

End of 2015 two-thirds of homes and businesses passed

ADSL broadband available to 99% of UK

NOTE: Dates are indicative and subject to change

super fast fibre access network
Super-fast fibre access network
  • Install c.30,000 cabinets
  • Lay over 50,000km of fibre
  • Train & up-skill c.4,000 people
  • Enable over 1,000 exchange areas

“ I used to spend a lot of time just drumming my fingers. With FTTC, the queue of files just evaporates. I reckon I’m releasing 20 per cent more time every day for productive work.Sam Mably, Bluequest Media Marketing & Design Agency, London

1.5m premises passed by early summer 2010

4m premises passed by endof 2010

10m premises passed by2012

2/3 of UK premises passed by 2015

BTID has delivered 20 major system releases in last year

BTID is providing Openreach’s control network to over 340 exchange sites

BTID is developing the systems & processes for the launch of FTTP

BTID is helping to develop TV, Content and future Voice services

how do we compare in the provision of super fast fibre access
How do we compare in the provision of super- fast fibre access?
  • Asia has the highest penetration
      • NTT currently has 13.8m customers: 31% penetration
    • KT currently has almost 7.2m customers: 42% penetration (this uses new data which lists ‘up to 50Mbps’ and up to ‘100Mbps’ products, however FTTB customers on an ‘up to 50Mbps’ historically may only have got around 20mbps)
  • US penetration rates are growing
    • AT&T currently has 2.6m customers: just over 10% penetration
    • Verizon currently has 3.8m FiOS internet customers: almost 24% penetration
  • European deployments appear to be following the Asia/US trend
    • NB some players do not publish coverage or take-up data for NGA, e.g. DT

Households in Operator Network Footprint (M) (Millions)

60

40

20

0

Penetration of Households in NGA Target Footprint

30%

20%

10%

0%

Penetration of Households in NGA Current Deployment Footprint

30%

20%

KPN

10%

0%

NTT

AT&T

Verizon

FT/Orange

KT

Belgacom

Swisscom

Penetration Rate over Time

NTT

AT&T

30%

Verizon

FT/Orange

KT

Belgacom

Penetration within Deployed Footprint

20%

Swisscom

 KPN

10%

Approx’ take-up rate trend

0%

0

5

10

15

20

25

30

35

40

Number of Quarters of Deployment to Date

case study fibre voice access fva

Fibre Voice Access is unique to Openreach and will support voice service delivery in a fibre world

It builds on common SIP (Session Initiation Protocol) and IMS models

Optical Network Termination units supplied by Openreach will include Analogue Telephony Adapters.

The Analogue Telephony Adapters may be controlled and accessed by Communication Providers (CPs)

Integrated to CP’s call servers via industry standard protocols basedon SIP

Will permit voice service and feature innovation on the part of the Communication Providers

Case study: Fibre voice access (FVA)

FVA on the premises

case study ethernet
Case study: Ethernet

Today 840 live Ethernet nodes

  • 90% of businesses are already within 5km of one
  • of our Ethernet nodes today
  • Additional 180 Ethernet nodes to be deployed by
  • Spring 2011
  • Openreach has a range of Ethernet access
  • products to control costs and increase
  • efficiency: Ethernet Access Direct (EAD), Aggregation,
  • Optical Spectrum, Access/Optical Spectrum,
  • Extended Accessand Ethernet backhaul products
  • Backbone Connect Limited (BCL) is a young
  • aggressive entrant to the Ethernet market. David
  • McLeod, director of marketing, BCL said:
  • “We are confident that EAD will help us secure more
  • business . We expect to grow our clients by 20%
  • as a direct result of EAD”

BTID is rebuilding Ethernet delivery across its strategic systems

BTID has created an industry engagement programme for Ethernet

BTID is building a centre of excellence for Ethernet

BTID is using a ‘model office’ approach for Ethernet

innovation

Innovation

Mike Galvin, MD research, 21CE and technology strategy

open innovation
Open innovation

Aim is to exploit innovation globally for the benefit of customers and shareholders

Revenue

Customer experience

Cost reduction

Innovate within each stage and through the entire value chain

Invent

Architect

Operate

Productise

Channels

Customers

Validate & Implement

People& Organisation

Customers

Universities

Partners &

Startups

Government

Using innovation to gain advantage

technology innovation supports our future
Technology innovation supports our future

Benefitting our business

Protecting our future

Commercial advantage

  • Continuing strong record of patented invention e.g.
    • techniques to deploy fibre at low cost and at scale
  • Portfolio of 6,400+ patents
  • New opportunities e.g.
    • technology for BT’s Wi-Fi products and services
    • network optimisation technology that improves bid win prospects
  • 80% of research directly supports our customer-facing businesses
  • 20% of research underpins future strategic options forBT Group
  • Measurement:
    • contribution to revenue generation, cost reduction and customer experience
    • delivery to time
    • patents filed
    • external awards

Using innovation to gain advantage

we contribute to bt s current portfolio
We contribute to BT’s current portfolio
  • BT Vision
  • Perceptual quality analysis (PQoS) tools
  • Perceptual QoS monitoring techniques for Vision, Canvas and beyond
  • Personalised content recommendation trial with 100,000 customers - increases ARPU

Cloud

  • Delivered four prototypes:
  • Cloud brokering
  • Bursting
  • ISV on-boarding
  • Cloud billing
case study blown fibre
Case study: Blown Fibre
  • Our work in this area has been key to making the business case for super-fast broadband viable
  • Move from two-man to single-man installation means almost 50%reduction in installation costs
  • Up to 1km of fibre cable can beinstalled in one operation
  • Overhead blown fibre deployment avoids new trenching where underground duct is not available, significantly reducing cost and inconvenience
  • Licensed to seven companies

Two-man compressor (left) and single-man compressor (right)

Using innovation to gain advantage

case study bt netdesign
Case study: BT NetDesign
  • Automated design tool for complex design problems
  • Optimised solutions typically deliver 10-20% CAPEX reduction
  • evaluating one solution manually took one month, evaluating several thousand with the tool to find the optimum solution took three-four hours
  • Providing automated in-venue high level design for the 2012 Olympics venues
  • Two patents filed and covered by a number of trade secrets

Using innovation to gain advantage

case study bt wan optimisation service
Case study: BT WAN Optimisation Service
  • BT WAN service is part of the GS Applications Assured Infrastructure portfolio
  • Reduces cost of providing/upgrading leased network links in territories where BT does not own a network by reducing the effective bandwidth of network traffic
  • Improves bandwidth utilisation by 30-60% and application performance by x2-x50
  • Includes a customer experience model to analyse the degreeof benefit (cost reduction and improved customer experience) that could be realised in each case
  • Launched in Global Services in early 2009, new revenue pipeline now in excess of many tens of £m

Using innovation to gain advantage

our research is recognised by the industry
Our research is recognised by the industry

British

Technology Excellence – R&D Achievement of the Year:

Winner

Autonomic Fault Prediction and Resolution

Global Telecoms

Business Awards

2009

Global Telecoms

Business Awards

2010

IT Service Innovation award:

WAN Optimisation Service with Riverbed

Business Migration Innovation award:

Optimising & Accelerating Product & System Migration with Ontology systems

Local Optical Service Innovation

Primary voice service for Ebbsfleet FTTP (BT and 2Wire)

Local optical network

Fibre to the cabinet: Openreach and Huawei

Managed services

Legacy network transformation: BT Global Services and Alcatel-Lucent

Billing services innovationRevenue assurance project (BT and cVidya)

New media innovationShape-shifting media (BT and Real Time content)

Business Excellence Award for Innovation 2010

Optimising & accelerating product and system migration with ontology system

Best Innovation for Telecommunications

I-Plate

The IET Innovation Awards 2009

final thoughts

Final thoughts

Clive Selley

bt innovate design the engine room of bt50
BT Innovate & Design: the engine room of BT

What we deliver:

How we deliver:

The BT Operating Model

Agile development

Reuse

Continuous integration testing

Platform strategy

Platform maturity

Systems reliability

SDK

Network strategy

Single global IP/MPLS network

Close down legacy

Super-fast to 2/3 of the UK

Right people, right skills, right locations

  • Improving productivity
    • 37% improvement indevelopment unit cost
  • Improving quality
    • 86% reduction in outage hours
  • Reducing cost
    • 21% (£700m) cost reductionover 2 years

Improving delivery of our future