Vodafone 2014 Annual Report Download - page 34

Our strategy (continued)
Operations
We are using the benets of our global reach and scale to standardise and
simplify the way we do business across the Group. This will both improve
cost efciency and reduce the time to launch new services and products
to our customers.
Using our centralised functions more
The Vodafone Procurement Company (‘VPC’) in Luxembourg centrally
manages the strategic procurement of the majority of our overall spend.
This allows us to leverage scale and achieve better prices and terms
and conditions. During the year the spend managed through the VPC
increased to €10.2 billion which represents around 50% of our spend,
up from €6.9 billion in the prior year.
By utilising the VPC we also learn how to apply best practice across
different spend categories. For example, by applying techniques from
how we manage the software licences for our data centres under
a single contract to how we buy software for our network operations,
we have achieved a 30% reduction in prices compared to what our
markets were achieving in isolation.
Standardisation and simplication
In the UK, we completed the rst phase of a programme to simplify
our organisation and improve all of our IT systems for billing, customer
relationship management, and online and retail services. All prepaid
customers services have migrated from legacy IT systems to one new
integrated platform. This has resulted in simplication of our tariffs and
improved end-to-end order processing times. We have also upgraded
all our retail points of sale to make the sales and logistics processes
simpler for our staff. All of this means a better experience for customers.
We have reduced the number of ways of returning a handset to eight,
and through our rationalisation programme we are reducing our
consumer price plans from nearly 5,000 to under 500.
Offshoring functions to shared
service centres of expertise
Our business depends on having simple and effective operations
that leverage the benets of shared service centres to support our
operations across the globe.
Over the past three years we have expanded the scope of shared service
centres in Egypt, India and Europe to provide nancial, administrative,
IT, customer operations and human resource services for all of our
markets. In 2012, we had just 9,5001 shared centre employees and this
has now risen to over 13,300, and has expanded to cover commercial
activities for our Enterprise business and customers. Our shared services
are delivering cash cost savings at an annualised run-rate of about
£180 million. We expect to have around 16,000 employees in shared
services by 2016.
Applying new technology to improve efciency
We have been at the forefront of Single RAN (Radio Access
Network) technology that enables the combination of 2G, 3G and
4G technologies into the same radio equipment. This has a number
of costbenets including reduced oor space requirements on-site
which reduces our site rentals, and efcient power technology provides
savings our energy bill. Single RAN units are now present in 45% of our
sites and we plan to expand this to 69% by 2016.
Reducing non-customer facing costs
While we continue to expand our employee base in customer facing
positions, we have been able to make savings across administrative
support positions in Europe. On balance this has led to a decrease in the
number of employees in Europe (excluding our acquisitions of Kabel
Deutschland and the minority stake in Vodafone Italy) and an increase
in the number of employees in AMAP.
Context
a The challenging economic, regulatory and competitive
environment we face in Europe has led to declining revenues in our
European businesses.
a Inationary pressure in emerging markets is putting upward
pressure on our cost base.
a The trend towards greater data usage signicantly increases the
trafc on our network.
a Against this background, to protect our level of protability,
we must continue to nd ways to improve operating efciency and
simplify and standardise processes for customers.
Where we are going
We aim to improve operational efciency, and to speed up and
co-ordinate our time to market for new propositions and services, by:
a using our centralised functions more;
a driving standardisation and simplication of our business
to maximise the benets of our scale;
a offshoring more business functions to shared service centres;
a applying new technology to improve efciency; and
a reducing non-customer facing cost.
Note:
1 Restated from 6,000, as stated in last year’s report, to include shared services employees supporting India
customer operations.
Vodafone Group Plc
Annual Report 2014
Vodafone Group Plc
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