A sharper focus

In today’ fiercely competitive telecoms space BT is seeking to diversify its revenues to cater to changing communications trends. But morphing yourself from a predominantly telco business into the global network and IT services creates unique challenges, as Jaoquín Schmidt learns during an interview with BT Group CIO Al-Noor Ramji.

“We're proud of the fact that we've followed customer demand and listened to customers. That's always been a problem in a large company, because there are so many people with opinions”
-Al-Noor Ramji

BT recently merged the CIO and CTO functions. Why was this decision taken – was it about making cost savings and better efficiencies within the group or for other reasons?
Al-Noor Ramji. I wouldn't be stating the truth if I didn't say that we did save money. But that wasn't the intention. The issue was to accelerate what we call 'concept to market'. In plain English, it's about making sure we deliver new products faster to the marketplace by hooking up the research functions, innovation functions, all the way through to the marketplace. This has become crucial for us because you have people worrying about the top line as well as the bottom line. Also, you need to make sure that people who are working similar disciplines interchange, so there's no silos between and far more opportunity to advance in one of the fields. For instance, lots of architects would like to get into research and vice versa. The size of the CTO function wasn't huge and we will grow it as we need, as opposed to just going one direction. We also need to make sure things happen faster so bringing two organisations together was one way of making this happen. The third reason was about convergence. We're increasingly getting software lead-in, regardless of whether it's network or product or IT. You can't install a new network now without software being the long pole in the tent.

Do you foresee a trend developing and other companies bringing the two roles and departments together?
AR. I spent most of my [working] life outside telcos where it is completely normal. I always had a CTO reporting to me. It's more to do with telcos, I think, than anything else, where the CTO used to run the networks and research and so on, and the CIO ran what you would call the OSS (Operational Support Systems) side. As software begins to play a bigger role you will begin to see the way Google has done things with no separation between the CIO and CTO. Vodafone, for example, has gone the other way and the CIO reports to the CTO. So yes I do so see this happening more and more but I don't know whether it could be called a trend. It should certainly happen if software is a prime driver.

Could you explain about the benefits of the creation of your five Global Development Centres and the reduction in complexity that the Virtual Data Centres (VDCs) will deliver?
AR. First and foremost in a global organisation, which also does so-called outsourcing and offshoring, you need to distribute the people to be near customers, to be with their colleagues and to be organised in such a fashion that the 'lead to cash process' is laid out on the floor. If you imagine that going from initial lead or a contract with a customer all the way to billing and then getting paid for it, is a lead to cash process. So how do you lay it out physically on a floor, in a building? Then you combine situating the customer in the middle of it, although the customer comes and goes as you develop things, and link them up by white boarding and video linking in such a natural way that people will actually speak to each other to avoid travel.

Avoidance of travel is a kind of financial way of putting it when it actually speeds up collaboration because you just speak. The microphones are hanging off the ceiling like lights so you speak normally, share things on a white board and you touch it with your finger. It is about a little bit of technology, a little bit of physical collaboration, and a little bit of lay-out which forces people to think through what their customer is going through. As you can imagine, if 24 steps were taking six months to get through it would tell you pretty quickly the customer isn't going to be too happy. As well as massive savings in collaboration, we found at least a 30 percent saving in costs

How do BT's VDC's help in slashing BT's carbon footprint? What other initiatives are you undertaking in an effort to be more 'green'?
AR. The green issue is something we have been doing for a long time and believe in a lot. The VDC obviously has different flavours, including power savings. Most servers in a data centre are running at between 5 to 15 percent and at the top end where people are really good at managing servers, they run at about 30 to 50 percent. By virtualising that layer, you immediately get a reduction in power consumption. And by structuring your data centre in such a way that you only blow air. For example, you suck out air, the top of a rack, whereas typically what you do is you're blowing cold air either from the top or from the bottom and you're trying to cool the whole room. On the next layer you're virtualising the CPUs to actually cross-share. Whereas before you would have disaster recovery as a separate thing, you no longer need that because one data centre will serve as a back-up for another. Or in the same data centre, you'll get virtualisation both within and across data centres. That gets rid of the whole data centre, if you've have enough data centres. Clearly, if you've only got the one then it doesn't save you anything."

21CN is one of the biggest IT programmes in the world. What lessons have you learned from this huge project and how much has it delivered thus far in cost savings from the original UK£1 billion target?
AR. The total cost savings so far amounting from the switchover to our 21CN network are UK£600million. In terms of lessons learned, when you're running a very large programme you forget the human element, because you focus on the technology and the massive spend as well as the excitement around building something new. There has to be a migration to be done because you can't move everyone overnight from one system to another, or one network to another, because, quite frankly, most of the customers don't care. Unless you give them something brand new, they don't want to move. The migration period takes a long time, and people don't plan for the migration period as much as they plan for the destination. It's a bit like the desire to get to the top of Everest. You assume you are just going to land by helicopter when in fact you forget you need to have ropes, tents and oxygen on the way up.

So I think the lesson learned was migration planning is a lot bigger than just the final destination would let you believe. For example, part of our plan is to replace the little electronic messages that come up at bus stops to tell you how long it will take for the next one to arrive. This is run by an ISDN line so when do you plan to disconnect it and connect it back up. Another example is Barclays. When do you migrate the whole bank to the system? They won't take very kindly to you slipping in the odd branch here and there because the CIO there will go demented. These sort of exercises need to be planned very carefully.

The next lesson was that people needed to be trained in a very different skillset when you make massive changes. They are used to repairing things that go wrong or they're used to doing a tiny bit of building but when you're replacing the whole country's networks and platforms and systems, suddenly the amount of new stuff you do is enormous. It's a bit like living in a house and then learning how to build one ­– it's not at all the same thing, right? I can do some repairs to a house but I couldn't build a new one. Also, the silos that we had, had to be broken, whether there were network people not speaking to systems people, across all lines of business. They all had to sit together and work together.

Presumably the planning into 21CN has been intense?
AR. I'll give you another example: you may need a new kitchen but most of us don't build kitchens for a living. If you did, however, you would be very careful to make sure the plumber arrived just before the electrician, who arrived just before the cabinetmaker and so on. You can forget this in a large project. People will say, 'I turned up and the site was closed so I went home'.

The guy who went home creates problems for the guys who then turn up later.  So the synchronisation of humans and the careful treading of work was enormous. We had 20-odd vendors who had to arrive, and they themselves were outsourcing to others, so it was a big people coordination task.

Whilst undertaking 21CN, the full force of the recession struck. How are you being effected by downturn – are budgets being cut and are you being asked to do more with less?
AR. Of course, most of us have anywhere in the world but the good thing is that we were on target on anyway. We were anyway heading that way because of our past investments in 21CN, but, in particular, the 'right first time' programme that we ran. The programme yielded a lot of benefits which reduced costs anyway, while the number of customer complaints that have declined and the number of phone calls that no longer need to be made to us. Again, we'll give you that data if you wish. But that resulted in cost savings anyway fundamentally. Then we had our platform programme, 21CN, which, allowed us to cut costs. So year on year, just in my department, measured as a normal person would measure it, meaning I spent UK£100 pounds last year. Not playing games with budgeting or anything, we spent UK£14 less. We're now putting in a new operating model, which will reduce costs even further.  I guess next year we'll get another similar amount out.  So over three years, we've saved a lot of money.

BT has transformed itself from a telco business into a global network and IT services company. What's been the secret of BT's transformation and what technology milestones are you particularly proud of?
AR. That's a good a question. The first thing we're proud of is the fact we've followed customer demand and we listened to customers. That's always been a problem in a large company because there's so many people with opinions. A couple of times we were messing around with technology for technology's sake. We were thrilled that we were going to be the world's first all-IP network and so on. However, the customers really do want faster speeds and they want different products.

From the competitive landscape, we're in fairly good shape, because we're now because we have biggest Ethernet footprint across the UK. So competitively we've improved. I think the milestones were obviously 21CN, the Ethernet programme, the BT Home Hub, BT Vision, the fibre rollout and Ribbit (see box out). These are BT milestones so I'm not trying to take the credit. However, I am probably most pleased with being able to give more than two million customers a home hub. It's easy to do these things in small numbers or give them to one bit of the country, but rolling them out nationally is totally different.

What gives you the biggest buzz about being CIO at BT?
AR. Getting customers together with the coolest technology. For instance, my mother-in-law has a problem with mobile phones.  She asks me why we say they are easy to use? I tell her they're easy to use because you press the green button and then you dial the number, and then you press a red button. But she says 'Why is it red to stop and green to go'? Then I realised it's because she's Indian and red is a good thing in India. Like the Chinese stock market, for example, when it's red, it's up. As a Brit, I think red must be a bad thing – stop. On iPhone there is an application for this problem, which is a pretty cool technology. When we see a new technology we have to consider whether we can get it to 10 million people because we are a scale company – a big company. We have to do things for a lot of people. We will never beat your one-man band who will do things for one customer. So bringing customers useful technologies and in scale are the things that give me the biggest buzz.