Vodafone 2007 Annual Report Download - page 41

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Vodafone Group Plc Annual Report 2007 39
execution phase and is progressing ahead of plan, with a number of
operating companies already having commenced service with their
respective vendors. The Group currently anticipates that this initiative will
result in greater economies of scale and improved quality of software
produced, as well as greater flexibility, leading to the faster rollout of more
varied services to customers. The Group currently expects to meet its
savings target of 25-30% of IT application development and maintenance
unit costs within two to four years.
•The supply chain management initiative focuses on centralising supply
chain management activities and leveraging Vodafone’s scale in purchasing
activities. Through the standardisation of designs and driving scale
strategies in material categories, the Group is aiming to increase the
proportion of purchasing performed globally. The alignment of all
objectives and targets across the entire supply chain management was
completed during the year. The Group currently expects to meet its savings
target of 8% of £3.3 billion external network spend this coming year, as
planned.
•The IT operations initiative has created a shared service organisation to
support the business with innovative and customer focused IT services. This
organisation will consolidate localised data centres into regionalised
northern and southern European centres and consolidate hardware,
software, maintenance and system integration suppliers to provide high
quality IT infrastructure, services and solutions. Consolidation is progressing
well, with the centre in Southern Europe complete and the centre in
Northern Europe expected to be complete by April 2008. The Group
currently expects to meet its cost savings target of 25-30% of data centre
spend within one to two years.
•The Group has commenced a three year business transformation
programme to implement a single integrated operating model, supported
by a single enterprise resource planning (“ERP”) system covering human
resources, finance and supply chain functions. The programme is expected
to provide improved information for decision making and reduced operating
costs in the longer term, though additional investment, including
restructuring expenditure, will be required.
•The network team continues to focus on network sharing deals in a number
of operating companies, with the principal objectives of cost saving and
faster network rollout. Implementation is under way in Spain with Orange,
the UK has announced its intention to sign a deal with Orange and other
deals are being explored and evaluated in a number of other European
operating companies.
•Many of the Group’s operating companies have participated in external cost
benchmarking studies and are using the results to target local cost
reductions. Initiatives that have been implemented to date include
reductions to planned network rollout, outsourcing and off-shoring of
customer services operations, property rationalisation, replacing leased
lines with owned transmission, network site sharing and renegotiation of
supplier contracts and service agreements.
PerformancePerformance