BT 2009 Annual Report Download - page 13

ADDITIONAL INFORMATION FINANCIAL STATEMENTS REPORT OF THE DIRECTORS BUSINESS AND FINANCIAL REVIEWS OVERVIEW
BUSINESS AND FINANCIAL REVIEWS BUSINESS REVIEW
11BT GROUP PLC ANNUAL REPORT & FORM 20-F
BUSINESS AND FINANCIAL REVIEWS
renegotiated contracts, resulting in price reductions of 12% on
average, and up to 35% in some categories. In addition, we have
focused on a number of areas of significant discretionary
expenditure including travel, consultancy and conferencing and
have achieved reductions in these areas. These actions are expected
to deliver sustainable cost reductions in the 2010 financial year.
How BT Global Services is changing
The operational review was completed towards the end of 2009,
resulting in a revised operating model and restructuring plan which
will reshape and refocus the business, further enhancing BT Global
Services’ ability to serve customers and establish a significantly
lower cost base.
Under the new operating model, BT Global Services will focus on
three customer segments:
being the number one provider of networked IT services to
corporate and public sector customers in the UK, building on BT
Global Services’ strong market position and the group’s 21CN
products and services
providing networked IT services to key multinational customers,
differentiating BT Global Services through seamless global
connectivity and delivery of BT’s core portfolio of products and
services
creating a BT Global Services Enterprises unit consisting of a
discrete portfolio of businesses addressing specific customer
needs in key countries.
Significant structural changes are being implemented. The majority
will be completed in 2010 in order to deliver the benefits of the
new operating model which include:
integrated sales, marketing, professional services, account
management and delivery capability, competing effectively in
each target market
enhanced bid management and start-up processes to improve
win rates on selected deals and ensure standardisation and
quality of delivery
a single global service model, consolidating a large number of
individual centres into a small number of larger operational hubs,
which will provide a single point of customer contact and enable
improved right first time customer service
continued rationalisation of systems and networks, reducing the
number of systems by a third and halving the number of global
networks, thereby removing duplication and enabling significant
cost savings
restructuring corporate support functions to serve the three
customer segments more efficiently and effectively
strategic partnering for sales, service and infrastructure.
As a result of this operational review, the group has recorded
specific item restructuring charges of £280m in 2009, with further
charges of approximately £420m in total expected to be recorded
over the next two financial years, the majority in 2010. These
charges predominantly arise from legacy networks and products
rationalisation and restructuring costs associated with people and
property. Further analysis of these charges, including their cashflow
impact, is provided in the Specific items section of the Financial
review on pages 36 to 37.
Market context
We believe that we have identified a clear path to a profitable and
sustainable business, building on a strong market position.
The global networked IT services market is valued at around
£600bn. We remain well placed to help our global customers
reduce costs and streamline their businesses in a challenging
market environment. We are seeing continued interest in network
operational efficiency, workforce management, security, unified
communications (including Telepresence and conferencing) and
global hosted contact centre solutions, as our customers respond to
the current economic environment.
Operational performance
In the UK
We serve businesses in virtually every sector of British industry,
from banking and finance to transport, logistics and the public
sector. We have around 1,800 multi-site customers in the UK.
We continue to make progress on our N3, Spine and London
Local Service Provider contracts with the National Health Service
(NHS) National Programme for Information Technology (NPfIT), the
largest non-military IT programme in the world.
Building on our work as the local service provider responsible for
upgrading NHS IT systems in London, we have taken on the
running of IT systems at eight acute hospitals in the South of
England. In addition, we are working with a further four acute
trusts in the South of England which have yet to roll out systems as
part of NPfIT, as well as implementing 25 new systems in
community and mental health trusts in the region.
We are deploying one of the world’s largest converged IP
networks for the Department for Work and Pensions to be
completed in 2010.
Reinforcing our presence in the local government sector, we
agreed a ten-year strategic partnership with South Tyneside
Council, worth more than £180m for delivery of a number of key
council services. We also won an extension to our existing
arrangement with Liverpool City Council and a new contract with
Sandwell Metropolitan Borough Council and two contracts with
Norfolk County Council with a combined value of £40m to provide
voice and data services and a schools internet service.
We are the official communications services partner for the
London 2012 Olympic Games and Paralympic Games. This involves
the provision and management of voice and data networks,
internet access and land lines required at each of the London 2012
Games venues.
We signed a number of deals with major UK corporate sector
customers including:
a seven-year, £160m outsourcing deal with Nationwide Building
Society to manage its networked IT services
BT Global Services
BT Global Services new structure
UK Domestic Multinational
Corporations
BT Global Services
Enterprises