BT 2012 Annual Report Download - page 26

23
Strategy
Our aim and strategy
Our strategy
Our ambition remains to drive profitable revenue
growth but the economic and regulatory headwinds
we are facing will make this more challenging.
Our strategy focuses on three key areas:
 customer service delivery
 cost transformation
 investing for the future.
These three areas, which we explain below, are the foundations for
making BT a better business. They build on one another: the better
we serve our customers and improve our processes, the less time and
money we have to spend on putting things right. This is a major driver
of our cost transformation and frees up resources for us to invest in
providing products and services for the future.
By investing in our six strategic priorities, outlined below, we expect to
grow the value of the business.
Customer service delivery
Customer service is core to our strategy and we always try to improve
the experience we provide to our customers. In practice this means
trying to do things ‘right first time’ – keeping our promises, being easy
to contact and straightforward to deal with. It means keeping our
customers informed and taking prompt action to put things right when
they have a fault. To improve our customer experience further we also
focus on reducing faults and removing the need for customers to call us.
‘Right first time’ is our key measure for customer service (see page4).
It measures how often we keep the promises we make to customers. As
well as improving service, keeping more promises reduces work needed
to put things right and so reduces our costs. In 2012 we achieved a
3.0% improvement in this measure, following a 3.0% improvement in
2011 and a 10.5% improvement in 2010. In addition we reduced faults
handled and calls about problems by 6.2% in the year.
In the first half of the year the theft of copper cable grew significantly,
increasing the number of faults suffered by customers. We have worked
with the police, Government, media and other stakeholders to raise
awareness of cable theft and to take action to reduce it. Cable theft
declined in the later part of the year thanks to this collective effort, but
more work is needed. We have invested in a number of innovations to
help prevent cable theft and to catch the people who commit it.
This cable theft, together with increased repair work related to the
demands for higher speed broadband and an increase in demand
for new lines, led to a 19% increase in engineer visits. We recruited
additional engineers and improved our efficiency resulting in a
reduction in the level of repair work outstanding to, on average, only
one and a half days’ activity. We have also improved our delivery
performance for new copper lines. We worked with industry to establish
a target lead-time of 14 days, and were performing consistently better
than this by the end of the year.
We made progress in other areas. For example, in BT Retail we aim to
deal with customer queries in one call, without the need for customers
to call us back. We saw the number of queries dealt with in one contact
increase by 20% in BT Consumer. As a result of our ‘right first time’
programme we reduced customer faults by 5% in BT Global Services.
A variety of initiatives to improve reliability led to a 15% reduction in
faults being handled by BT Wholesale.
We believe the changes we have made, and will make in the next
financial year, will deliver significantly improved service levels for
ourcustomers.
Details of the performance on customer service delivery
for each of our lines of business can be found in the
Performance section on page
41
Cost transformation
We have been taking a phased approach to cost transformation. The
first phase focuses on the efficiency of our expenditure in areas such as
labour costs, consultancy spend and procurement from third parties.
The second phase tackles ‘right first time’ process re-engineering and
the reduction of overhead costs. The third phase looks at in-sourcing
and output-based pricing. All these phases continue across the business
with a particular focus on end-to-end process re-engineering to
improve service and reduce costs still further.
Specific activities during the year have included reviewing the way that
bundled orders flow through the organisation; the sales process for
some of our more complex products; training and development of our
people; and broadband faults. Cost transformation is as much about
‘cost avoidance’ as it is about reducing the unit cost of specific items
or activities and the success that we have had in reducing broadband
faults in the network has allowed us to offset some of the extra costs
associated with the increase in copper line volumes.
Overall, we made good progress with our cost transformation activities
during 2012. We reduced operating costs by £933m or 6%, with
savings across all our main cost categories. This represents a cumulative
reduction in operating costs of £2.9bn over the last three years.
All of our lines of business have contributed to the progress made on
cost transformation. Our two internal service units, BTID and BTO, have
delivered benefits to the customer-facing lines of business by targeting
and driving lower delivery and operational costs. This has been achieved
through vendor rationalisation and greater focus on automation
of processes and operations. The emphasis has now moved to the
rationalisation of our network and IT infrastructure and implementing a
lean approach to our operations.
Our aim is to drive shareholder value by making BT a better business
with a better future. We have made good progress towards this goal
in 2012, despite the challenging conditions.
Our strategy
Overview
BusinessStrategy
Performance
Governance
Financial statements
Additional information Overview
BusinessStrategy
Performance
Governance
Financial statements
Additional information