| Almost exactly a year ago, BT - the largest | | | | now about our finance function being a business |
| communications services provider in the UK and one | | | | partner for change delivering great business |
| of the largest in the world - signed a six-year, | | | | performance, so you don't see words like "control" or |
| £128-million ($250-million) extension to an existing | | | | "reporting" in that mission statement or vision |
| outsourcing contract with tech outsourcing provider | | | | statement. |
| Xansa (now part of the France-based Steria Group). | | | | To execute against that we think about our finance |
| The latter is now contracted to manage BT's UK | | | | function in three areas. One is transaction processing. |
| F&A, transaction processing, ledger and payroll | | | | The second was the creation of Centers of |
| operations until 2014. We spoke with Andrew Kemp, | | | | Excellence, which bring together finance systems; bring |
| BT's Director of Group Planning & Analysis, about | | | | together reporting, planning and analysis capability; and |
| the nature of the second-generation agreement, its | | | | bring together some of the regulatory reporting |
| challenges and benefits, and about the innovative | | | | capability. And then at the top of the pyramid if you |
| "aspirational SLAs" which are part of the deal and | | | | like, we believe in a concept called "business insights" |
| which are driving forward improvements for both | | | | where we think about people in the finance function |
| buyer and provider. | | | | working very closely with the business on support, |
| Q: Andrew, thanks very much for joining us. First let's | | | | supplier renegotiation, market, product, competitor |
| get some background: what does your role entail? | | | | analysis - that kind of thing. We felt we could get more |
| A: I'm responsible for all the group's reporting, planning | | | | value from our finance function that way, but we didn't |
| and consolidation activities, serving all the businesses | | | | want to add cost - quite the opposite. So as part of |
| within BT. I'm also responsible for all our finance | | | | that overall strategy we've outsourced all of our |
| outsourcing deals and also for the group's finance | | | | transaction processing across the group and where |
| systems strategy. | | | | appropriate in the Centers of Excellence we've begun |
| Q: And are all these activities located in a shared | | | | to outsource some of that as well. |
| service center? | | | | Q: It sounds like a lot of the things you've included in |
| A: Using both Steria and Accenture we have delivery | | | | "business insights" would fit into the Centers of |
| centres in Chennai, primarily; some in Prague; but I've | | | | Excellence, no? |
| also got what we call a Center of Excellence for the | | | | A: Not really, no! The Centers of Excellence house |
| reporting, planning and analysis function in the UK which | | | | activities and areas of commonality that serve the |
| is based in and around centers around London - not in | | | | whole business. Things around the month-end close, |
| any one single building. | | | | standard ways of reporting, standard ways of running |
| Q: What operations do you have running out of the | | | | a budget or a forecast process: they can all come into |
| UK? | | | | a Center of Excellence. The analysis around the way |
| A: Roles that are fairly close to the customer, a high | | | | we would deal with our consumer business in the UK |
| level of interaction with customers' finance and | | | | and think about that in terms of the price plans, BT |
| analysis functions, and quite a lot of planning, together | | | | Together etc, is fundamentally different from the |
| with group consolidation which we don't outsource. | | | | analysis and support needed when you're running a |
| Most of the transactional stuff is done abroad. | | | | global services networked IT services business. |
| Q: How much interaction is there between BT's | | | | Q: So what's next? Where next with the Steria |
| operations over here and the Chennai centers? | | | | relationship and with BT's outsourcing philosophy? |
| A: For me it's been pretty seamless, and the transitions | | | | A: Well, we're one year into the next six-year period of |
| have been pretty seamless; we have our single points | | | | the second-generation deal, so over the next year or |
| of contact for various processes. We tend to focus | | | | so Steria and ourselves will work to get to the 80-20 |
| on the output rather than how they do it. | | | | offshore-onshore ratios. We are constantly looking at |
| Q: Tell us about the latest deal you've done with Steria. | | | | and refining scope; there're some interesting interplays |
| A: It's a second-generation deal building on the previous | | | | between what Steria does and what BT does around |
| five to six years' work we've done with them. Five | | | | their involvement in procurement and procure-to-pay, |
| years ago we did a TUPE [Transfer of Undertakings | | | | and payroll, and those interfaces: there's plenty to |
| (Protection of Employment): UK regulations preserving | | | | explore there. We have in the current deal created the |
| "employees' terms and conditions when a business or | | | | concept of aspirational SLAs, so we have a vision of |
| undertaking, or part of one, is transferred to a new | | | | trying to drive the service towards world-class by |
| employer"] transfer outsource to them, so it was still | | | | setting and then working together to deliver against |
| UK-centered. The second-generation deal will move | | | | aspirational SLAs, and we'll see where it takes us in a |
| the onshore-offshore ratio from about 50-50 to 80% | | | | couple of years. |
| offshore on average within the next twelve months or | | | | Q: How do you define "aspirational SLAs"? The SLAs |
| so. We've strengthened the SLAs and performance | | | | most of us are familiar with are very set-in-stone |
| from our perspective, and have really built on the | | | | targets against which a service is measured and |
| strong relationship we've had with Steria over the past | | | | assessed... |
| five years. | | | | A: Yes, and by their very nature they're not aspirational |
| Q: What operations were part of the original | | | | - because you would never commit in a contract to it |
| outsourcing deal? | | | | with the penalties likely to be incurred. |
| A: Our UK transaction processing; this is what's now | | | | Q: So how have you arranged things? |
| getting moved out to Chennai. Accenture do our | | | | A: We have two tiers. Firstly we have the SLAs |
| non-UK transaction processing. | | | | which you've just described, and then we have a set |
| Q: What was it about Steria that attracted you initially | | | | of aspirational SLAs which we recognised when we |
| five years ago? | | | | set them would probably need a level of investment |
| A: Primarily two things. One was that they were | | | | from both parties. They are the things which are part |
| prepared to take the employees on a TUPE basis, | | | | of our governance conversations about how we can |
| guaranteeing the rights of those individuals. Secondly, | | | | take the relationship forward to deliver a truly |
| and linked, they had a much stronger commitment to | | | | world-class service. |
| people, and people development, and culturally were | | | | Q: Planning for future added value from the |
| much more aligned with the way BT was back then. | | | | agreement? |
| Q: What have been the biggest obstacles, and the | | | | A: Yes, exactly. |
| biggest benefits, that you've encountered through the | | | | Q: That's quite unusual, but sounds dynamic. Was this |
| deal? | | | | something you developed yourself? |
| A: In terms of obstacles both our organisations over | | | | A: It's something we were reflecting on. One of the |
| the last five years have had to work with the legacy | | | | things I've been thinking about as I've been working |
| of dealing with people and behavioural issues | | | | with the outsourcing world for three or four years now |
| associated with the original outsource. As we're | | | | is that there's a tremendous focus on SLAs: you get |
| moving work offshore that's obviously been a | | | | to your quarterly governance meetings and |
| challenge. We also have had to work through and | | | | everything's green and there's no sense of challenge |
| around the fact that these were ex-BT employees | | | | or pushback or aspiration or ambition, because |
| and they had long-standing relationships with friends | | | | everything is seen to be working ok. For me that |
| and colleagues who were at that point still employed | | | | wasn't desperately satisfying. So we were really keen |
| by BT, so getting governance to work was a | | | | to find a way of striving to improve what we do, and |
| challenge because there were people just going round | | | | this is the methodology we've come up with. |
| the edges and finding their colleagues: that wasn't | | | | Q: And it's working well for you? |
| easy. I think the benefits have been significant, | | | | A: We're one year in and most of the focus is still on |
| economically, but just as importantly we get much | | | | the onshore-offshore ratios, but I've got a couple of |
| better transparency around what we're doing now; I | | | | examples where I'm really quite encouraged actually. |
| think the controls are stronger; and I think the process | | | | The way we interact - both BT and Steria - with our |
| improvement that we're getting - particularly now over | | | | suppliers is too old-fashioned; there's too much paper |
| the last couple of years or so - is very good indeed. | | | | and pen, you know? And now we're really pushing |
| Q: Andrew, moving onto a broader perspective let's | | | | electronic invoicing, together, and I think that will deliver |
| talk a little about BT's sourcing philosophy: it seems that | | | | a much better supplier experience - and I think it will |
| what you can, you are... | | | | take overall costs out for both companies and improve |
| A: Yes. For us in finance our outsourcing strategy was | | | | the overall level of efficiency of the service. So that |
| a function primarily of where we wanted to go with | | | | would be an example where we've gone from below |
| our finance function. We had a finance function a few | | | | 50% electronic invoicing and I'm pretty confident that |
| years ago that was typically focused on reporting, | | | | during 2009 we'll be north of 80%, and we'll take stock |
| keeping score. We knew we were trusted and | | | | at that point and work out what that means and if it's |
| respected as a function but we also knew that the | | | | worth taking further. |
| business wanted more from us, more value. We think | | | | |