BT 2016 Annual Report Download - page 21

Overview The Strategic Report Governance Financial statements Additional information
23
Transform our costs
Our approach to cost transformation
We run large and complex cost transformation programmes, led by
a team of consultants. These consultants are BT people. They know
our business better than anyone.
Our approach is based on a methodology honed over a decade.
It’s underpinned by forensic data analysis, strong governance and
the support of senior management.
Our largest cost transformation activities are driven ‘top‑down’.
They might be end‑to‑end programmes spanning multiple lines
of business or complex changes contained within a single line of
business. Continuous Improvement (CI) provides a complementary
‘bottom‑up’ approach. CI makes small but important changes to
how we do things every day. It has the added benefit of improving
employee engagement.
Training is a key part of our approach. We have an in‑house Cost
Transformation Faculty, part of the BT Academy (page 32). The
faculty is responsible for the continued development of our ‘change
professionals’. This year we trained and coached more than 900
people. BT is the only UK organisation licensed by the British
Quality Foundation to certify qualifications to the most advanced
levels in Leana, Six Sigmab and Change & Project Management
methodologies on such a scale.
How we did in the year
This year, our underlying operating costs excluding transit were up
2% mainly reecting higher leaver costs and our investment in BT
Sport Europe. These oset our cost transformation activities. Over
the last seven years we’ve reduced our operating costs and capital
expenditure by over £5bn.
Programmes this year included:
• reviewing and improving our end‑to‑end process for planning
engineer visits. By creating centres of excellence where planners
are based together, streamlining processes and improving
systems, we’re reducing the cost of failure, eliminating
ineciencies and improving service;
• developing a new operating model to govern how we serve the
UK business market. By consolidating our sales and marketing
teams, we’ll reduce administrative eort and duplication, and
focus our people on what really matters – selling to customers;
• consolidating our IT functions to improve data security, system
stability and to gain economies of scale. We’ve also made sure
that our people have access to the right training programmes,
career opportunities and are sharing best practice;
• rationalising, standardising and automating our internal
reporting function. We’ve also created a data analytics capability
to improve decision‑making and provide support on larger
transformation programmes;
• improving the eciency and productivity of our o‑shore shared
service centres. In particular, we’re reducing the administrative
resource required to operate these centres; and
• reviewing and redesigning our overseas operations with the aim
of ensuring that back‑oce functions are done from centres of
excellence located in low‑cost countries. We’ve also continued
to apply best practice from our UK operations.
Looking ahead, we’re focused on:
• realising substantial cost synergies from the integration of BT and
EE (page 98);
• streamlining our Ethernet delivery and broadband repair processes
with the aim of improving customer experience and reducing cost;
• reducing our network costs in the UK and overseas, which account
for a large proportion of our overall costs; and
• rationalising and standardising our products, networks, applications
and platforms, to remove complexity and reduce cost.
Key priorities
We’re confident that there are plenty of opportunities to reduce
costs further. We see well over £1bn of gross opportunity over
the next two years, much of which can be reinvested for growth.
We continue to benchmark our cost of doing business against
other large telecoms companies. While we’ve continued
to improve our performance, we still see opportunity to do
even better. Increasingly we look beyond the world of telecoms
to other industries to identify more opportunities.
You can read about cost transformation within our lines of
business from page 57. And the group’s operating costs are
described on page 98.
a Lean is a methodology for achieving small, incremental changes in processes in order
to eliminate waste and improve eciency and quality.
b Six Sigma is a data‑driven methodology for eliminating defects in processes.