Differentiation and change PROJECT PARTNERS
Differentiation and change Written by: John O’Hanlon Produced by: Kiron Chavda
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Telefónica UK, operates under one of the most popular and successful consumer brands in the UK – O2, is evolving. But whatever the future holds, that future will be shaped, and increasingly led, by IT: we speak to CIO Brendan O’Rourke about this trend
Brendan O’Rourke, Telefónica UK’s CIO
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t can’t have been easy for Telefónica’s UK business to stay focused over the last six months or so since the announcement that it was to be acquired by CK Hutchison. However, its leadership team’s priority has been to continue looking after customers, delivering the very best experience that they have come to expect from O2. We have written recently about Telefónica’s proposed shared services model for all its operating businessess, centralising in what the Global CIO Phil Jordan described as a “whole new era of full stack, business-led IT transformations.” The UK business had been in preparation for eight months when, with the impending divestment added to the sale of the Czech,
Slovak and Irish businesses and merger of the German business with E-Plus and its flotation, put an end to Telefónica Global Technology in Europe. However O2 has not been diverted says O’Rourke. “We have done a particularly good job in the IT team in keeping the focus on the here and now.” This is borne out by the fact that it has done better financially in the last year than in the preceding six years, and O2 is now a leading digital communications company with the highest customer satisfaction with customer service for any mobile provider according to Ofcom. “We believe the opportunity that technology gives people is massive and that people’s potential is not just a business issue but a social and societal issue that we want to
OFCOM praises O2 for providing the highest customer satisfaction for any mobile provider
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Telefonica and IBM Driving the IT Journey … IBM is proud to partner with Telefonica to provide post-pay billing systems and services such as rating and mediation, customer care and access control technologies that ensure data remains secure. The original outsourcing contract was signed in 2002, and is now entering its 14th year. Over that time the pace of change in the industry has accelerated beyond all expectations, and shows no sign of abating. Systems originally designed to accommodate 1-2 million subscribers now handle in excess of 11 million accounts and regularly rate over 20 million events per hour. IBM's systems are responsible for billing in excess of £3 billion each year, representing over 60% of Telefónica’s UK revenues. To deliver this we have around 250 professionals from 13 of IBMs global locations. Most of the teams are based in either Hursley, near Winchester or in Bangalore and their combined knowledge and experience of the solution, of our customers' challenges, and of the global Telco sector is considerable. IBM recognises just how critical our contract is to Telefonica, and we reflect this in our approach to delivering projects and maintaining service. Attention to detail, building and developing the expertise of our teams, and an maintaining an ethos of continuous improvement to enhance resilience or reduce costs lies at the heart of our operations. Many of the initiatives that drive these outcomes are generated through online innovation jamsessions. These are a platform for suggestions to be posted and discussed - making sure everyone's voice can be heard and their ideas shared. It's a great mechanism to pool expertise and share knowledge across a global team.
To put structure around the improvement programme, Telefónica and IBM have embedded a Value Generation Board to formalise the ideas. A Telefonica spokesperson described the process: “Ideas springing out of the Value Generation Board are presented on vision cards to senior executives and analysed by Telefónica commercially, leading to a constant flow of technical and business enhancements throughout the company,”
IBM is also introducing new DevOps tools to make dramatic efficiency improvements and automate a number of previously manual activities. This has reduced human error and made the process of implementing change faster and more reliable. The team is currently approaching 1000 consecutive successfully implemented changes over a 250 period - a fantastic achievement in such a complex environment. This application of the IBM DevOps Toolkit to support Telefonica is the first in the UK. New Mobile applications are being built on the Bluemix platform, hosted on Softlayer. Testing services have been transformed with Greenhat. Programme control has never been better since the Rational toolset was implemented, and scheduling and deployment of changes are then managed using Urban Code. Our team continues to be highly motivated, enthusiastic and keen to be engaged in the programme. If you would like to learn more about IBM’s DevOps capabilities please visit: http://www.ibm.com/ibm/devops/us/en/index.html
The right partner for a changing world At IBM, we collaborate with our clients, bringing together business insight, advanced research and technology to give them a distinct advantage in today’s rapidly changing environment. Through our integrated approach to business design and execution, we help turn strategies into action. With expertise in 17 industries and global capabilities that span 170 countries, we can help clients anticipate change and profit from new opportunities The mobile telecoms industry faces an enormous challenge.‘Over-the-top’ operators provide instant messaging, calls, mapping, music and video, consuming massive bandwidth and increasing carrier costs. So how do companies overcome this ‘Operator’s Dilemma'? Stepping up the value chain into advanced, highervalue services has to be the answer – addressing ‘connectedness’; being relevant to consumers, and generating truly personalised experiences. The key lies in recognising that this journey is not just about ‘being a digital Telco' – we are now entering the cognitive era. All businesses in the future will use applications that ‘learn’. Using the technologies originally developed for IBM’s Watson five years ago, ‘learning applications’ are already available to deliver true ‘personalisation’, and as individual tastes change, so the apps will use the plethora of structured and unstructured data out there to learn about personal preferences, simplify engagement processes and shaping experiences. The power of these cognitive technologies has been demonstrated in much more profound applications, such as solving water shortage problems in Africa, and saving cancer patients in the USA. Now is the time to bring this capability into mainstream technology. If you would like to learn more about IBM’s Cognitive Business initiative please visit: http://www.research.ibm.com/cognitive-computing
Driving the journey onwards
Innovation is critical to Telefonica’s future. The IBM team has embraced this, and recognised that building new applications on legacy platforms is not the right answer. The Telefónica systems infrastructure has grown incrementally over decades, gradually increasing in complexity. The latest cloud technologies, security improvements, modern applications and componentization techniques offer routes to simplify the core infrastructure. Today, Telefonica’s real-time Sales Dashboard is hosted by IBM SoftLayer avoiding the need for additional physical servers or storage, and ensuring that the solution can scale rapidly as accesses increase for major product launches. IBM has the technology and expertise to support Telefonica on it’s journey to the future – and we’re confident we can help you too. For more information please contact: Peter Chard, IBM Telefonica Account Project Executive (pete.chard@uk.ibm.com), your IBM representative or IBM Business Partner, or visit www.ibm.com
address. We are a leading mobile player in a market that is probably the most competitive and the most innovative in the world,” he says. But innovation itself needs to be driven by customer engagement, “We are going to focus our transformation and capacity investment on those areas that can be differentiated through IT, areas that will be identified from what we learn about customer preferences.” Investment driven by customer insight and experience is, he believes, what differentiates O2 in its market, and is illustrated by the ways in which Julie Sadler’s IT Engagement and Delivery team works closely with North Highland to analyse and
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understand customer and business requirements to deliver new services. Top line revenue growth can no longer come from commodity offerings like voice, text and data bundles, though demand for network capacity is increasing exponentially. “We have found that since we rolled out LTE we have seen 100 percent year-on-year growth in data usage.” O2 has reached 66 percent 4G penetration and has committed to 98 percent indoor coverage by the end of 2017. This in itself will not differentiate the business. Connectivity is all very well, but ‘connectedness’ is where the real growth opportunity lies. “Our business strategy is to provide a great customer experience, making sure people can leverage all the potential of the technology but delivering it in a way that emphasises the connectedness on top of the connectivity.”
“We are going to focus our transformation and capacity investment on those areas that can be differentiated through IT” – Brendan O’Rourke, CIO
Head office on Bath Road in Slough
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Making Software. Simple solutions to big business problems.
We are particularly proud of what we accomplished in close collaboration with O2 since 2010, supporting them every step of the way in their digital transformation. Thanks to O2 leadership, we were able to innovate to turn their vision into reality.
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Examples of what he means are business applications like Office 365 and MacAfee security (“We are the fastest growing UK reseller of these products – and we are a mobile business!”) or Just Call Me, a very simple, cheap way of setting up a conference call aimed at small businesses. “We also offer Mobile Voice Recording to Enterprises, a network-based service that captures calls and text messages made and received on any mobile device, regardless of operating system.” This is important for any business these days, and for some like banking or insurance, a regulatory requirement. Innovation is key to competitive differentiation O’Rourke has been at Telefónica for six years, developing the digital online platform, then assuming global responsibility for rolling out digital products to the Operating Businesses around the world in a standardised form that they could deploy with ease, before coming to O2 as CIO. “In my career I have spent a lot of time rolling out mobile networks and IT around the world as the mobile ‘wave’ rolled out to Latin America and Asia. I believe that experience has given me a great insight into how different markets innovate and what is important in the UK.” He considers the UK as the world’s most innovative digital market but taking Bill Gates’s mantra: ‘We always overestimate the change that will occur in the next two years and underestimate w w w. o 2 . c o . u k
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You can wait for opportunities. Or you can create them. In this increasingly dynamic business environment, technology inspires new business models, opens new markets and reveals new opportunities every day. At Cognizant, we combine business process expertise, next-generation technology and a flexible, collaborative approach to help global organizations not only run better, but run different. It’s this entrepreneurial spirit that has kept us on Fortune’s list of ‘Top 100 Fastest Growing Companies’ for the eighth year running. So if you’re ready to forge new trails, Cognizant can help. Because we believe that those who truly embrace change have the potential to change the world.
Cognizant and Telefonica: Redefining Customer Experience Cognizant, a global leader in business and technology services, is proud to be associated with Telefonica UK on its journey to a leading Digital Telco. Through a strategic partnership with Telefonica UK’s Information Technology organization, we are in a privileged position to enable the business to deliver the end-to-end next-generation ecommerce customer experience and data-driven business decisions – befitting the market-leading brand (O2) presence of the organization. Cognizant’s cross-functional and crossindustry expertise coupled with global and multi-cultural experience brings unique insights to our digital solutions – from concept to market. We are in a unique position to witness this Global Industrial Mashup, where uniting the physical world seamlessly, meaningfully and efficiently to the virtual world drives success and creates market disruption. Cognizant has the privilege of working with Telefonica at the juncture of physical and digital integration driving the next-generation omnichannel customer experience – a key aspect of Telefonica’s Digital vision. A relationship that started in 2011 to bring in agility and scale to ecommerce service delivery, focused on establishing technology platform to drive customer delight for a 20 million plus customer base, has now taken a shape of enabling end-to-end market leading business
ambitions around the next-generation ecommerce customer experience. Cognizant’s hyper productive, agile and global delivery teams have implemented a “Continuous Delivery” ecosystem featuring build automation, test automation and automatic deployments to the Cloud – essentially a software-based assembly line where new features are rolled out for local as well as global consumption at Internet Speed. Through the journey, the integrated teams have won accolades such as the Ecommerce 2012 Award for Excellence – in the Redesign/ Relaunch of the Year category. Telefonica’s goal of leading the market with a Digital Telco identity, combined with Cognizant’s aim of being a front runner in today’s Digital evolution, makes this a unique and complementary partnership that can enrich people’s lives and help them live and work better.
“We believe the opportunity that technology gives people is massive and that people’s potential is not just a business issue but a social issue” – Brendan O’Rourke, CIO The UK Team with Brendan O’Rourke
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the change that will occur in the next ten’ as a starting point, he says the focus right now has to be around enabling customers to adopt the not-so-new services like Office 365, which represent massive change for them. “Creating the ability for them to transform is innovation today: meanwhile the lab is asking, what will be the behavioural change in work that we need to deal with in five years’ time?” Don’t overestimate the speed at which they will adopt the next big things like the cloud. The 15 or so people who work in Telefónica UK’s award-winning IT lab keep their eyes firmly on the revenue potential of innovation. They are encouraged to pursue and test ideas, some of which do not work when tested in user groups – this way it fails fast and cheaply. Others really
Video: Introducing the O2 TU Go app
fly – for example TU Go, a free app that allows customers to text or call anyone, not just an O2 customer, or check their voicemail over Wi-Fi – even in the absence of a signal, and using multiple smart devices. “It is quite different from other WiFi calling applications on the market. We started in the lab, prototyped in the lab, gave it to customers to try, and it is now Telefónica’s global Wi-Fi calling app.” This is the lab at its most effective. Horses for courses The lab is just one of the teams Brendan O’Rourke is driving, though one that epitomises his obsession with people and skills driving business value. When he took up the reins O’Rourke found w w w. o 2 . c o . u k
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ABOUT TECH MAHINDRA
Tech Mahindra represents the connected world, offering innovative an enabling Enterprises, Associates and the Society to Rise™. We are a 90 countries, helping over 780+ global customers including Fortune connect across a number of technologies to deliver tangible business Fab 50 companies in Asia as per the Forbes 2014 List.
We are part of the USD 16.9 billion Mahindra Group that employs m operates in the key industries that drive economic growth, enjoying a information technology and vacation ownership.
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nd customer-centric information technology services and solutions, a USD 3.9 billion company with 105,200+ professionals across 500 companies. Our innovation platforms and reusable assets s value to our stakeholders. Tech Mahindra is also amongst the
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Chris Barnard Chief Architect
Lisa Turpin Head of Service, Delivery and Sourcing
Julie Sadler Head of Engagement and Delivery 20
an IT function that was fragmented. “We were perceived by the businesses as an enabler, good in parts, less good in others, and we had complexity and cost challenges.” That neat euphemism means he had to pare down his department, refocusing on the skills and roles needed for the future. “My vision for IT is to enable it to differentiate the business through technology. That is where we want to be. To get there we have to think forward and consider the revenue and margin opportunities of the future, the skills they need and how to get those skills into our business. “That showed me we are doing the right things. We are introducing new career paths. We have defined seven skills for the future: information security; service; product development; IP networking; commercial & vendor management; Internet of Things/cloud and information & data.” This means that there are great opportunities for new graduates, and also that mid-career staff, versed in skills like billing systems, can
retrain – and gaining professional accreditation is part of that – in roles the business needs going forward, such as cyber security or business intelligence. The very skills that are sought after in the wider jobs market. The new strategy leader Redefined individual roles reflect the emergence of IT as a business leader. “One of the first things I realised was that IT ought to move from an enabling function to a differentiating function. It was clear to me at the time that there were a number of areas where we had to focus. One was our relationship with the business, how to act more like consultants and smart technology partners. Another, to ensure that we manage, with our suppliers, to deliver new technology effectively.” The journey has five stages, he elaborates, functional, enabling, contributing, differentiating and finally transforming. “When I came
Alistair Baird Head of Business Intelligence
Jennifer Rigby Head of Channels and Innovation
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TELEFÓNICA UK
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in we were on the boundary of functional and enabling. We have just completed our annual assessment and we are now solidly contributing, so we have moved up a whole level of maturity over the last two years and with it my role as CIO has grown too. “I firmly believe there are certain things a CIO has to do. You create your role based on where you think you can make the right business difference. I have gone from somebody who runs delivery and operations to somebody who is leading a team that is challenging the business through innovation, driving the digital revenue story, looking at large scale transformation and leading that in the business.� In this the voices of CIOs and CTOs of large organisations can be heard chorusing their agreement. To paraphrase the industry guru Gartner, a company without an IT transformation
Experience workshop for customer innovation and CXD team
Space team challenge
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TELEFÓNICA UK
What should your company’s digital strategy encompass? Digital is already the most overused word on the planet so there is a very high likelihood that every stakeholder in the organisation will have a different perception of what the digital strategy should be, getting that shared understanding is an important first step. We’ve identified 4 facets of digital strategy that we think are quite helpful in these conversations: Digital Workforce enablement – If you aren’t empowering your workforce to operate in a digital way then they won’t be able to see the opportunities digital presents. This will constrain: innovation, automation, simplification, well-being and retention. They need to be encouraged to continually evolve their ways of working as new tools become available, experiment and choose. A locked down laptop running office apps developed 3-5 years ago and email as the only real collaboration tool is a big fail here. Workforce enablement isn’t just about End User Devices and software. Nowhere is the need greater than in the IT function that provides this. They need tools to automate, dev and ops need to be one team, they need rapid cycle times and a product not project culture. This isn’t an IT transformation either, working in departmental silos will kill it. It’s a whole business unit / product transformation. Digital Customer Engagement – This is the most common thing people refer to when they think about digital strategy. Channel shift, multi-channel, Omni channel, customer journey mapping and the plethora of new opportunities to engage with your customer in a way that is really tailored and meaningful for them. The ability to measure success in real time through data and analytics and the ability to rapidly iterate digital touchpoints to continuously improve them. Digital Partner and supply chain integration – This is possibly the biggest opportunity and is often overlooked. Its full of efficiencies and new business opportunities. Straight through processing can remove whole departments and fundamentally change the service you are able to provide. Automation can knock zeros of costs, and this is an area where the BPO industry is starting to bring fully automated BPO to the market if you really can’t do away with the process entirely. Digital Business Model Disruption – This is both an opportunity and a big threat. Doing the three above will open up opportunities to fundamentally change your business model. Not doing them will leave those opportunities to new market entrants or your competitors. Ideally here the strategy will be to consciously review the strategy regularly, not annually, to encourage input from the whole workforce you’ve empowered to innovate. There is an opportunity in this space to be the most trusted advisor to the CEO for the business focused CIO.
Tel +44 207 812 6460 Email 2 4ben.grinnell@northhighland.com www.northhighland.com
strategy now, will not exist five years’ hence. IT has left its image as a service department behind it and is accepted as a strategy leader, having moved from managing cost to delivering value. Well … nearly. There is still pushback at all levels. “You have to work hard with your team to change the mindset,” he acknowledges. “If you are growing the top line of your business by differentiating it with technology you are making a real difference. Critical to this is an effective Enterprise Architecture, Strategy and Planning team such as O’Rourke is building under his Chief Architect Chris Barnard. “If all you are doing is managing your cost base and your delivery function you are a functional leader, which is fine but that is not the role of the CIO any more. One of the roles of the CIO in the future is going to be to oversee the federation of IT into the business. Technology is what business will be about.”
384 The number of IT staff working in the IT department
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175 The number of suppliers that support IT operations “One of the roles of the CIO in the future is going to be to oversee the federation of IT into the business. Technology is what business will be about” – Brendan O’Rourke, CIO
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Partners in progress Finally, there’s going to be a step change in the area of supplier management. The IT department comprises around 380 people, running everything from IT operations, lab innovation, and app development to corporate platforms like email, the intranet and workplace. However there’s a huge support base of around 175 suppliers with, between them, perhaps another 2,000 people. “We have around a dozen or so top suppliers, or partners and probably about 80 percent of our spend is with these.” Partners like Accenture, Cognizant and Equal Experts will be key to the omnichannel plan. Cognizant drives much of Telefónica UK’s business critical online applications for e-commerce, while Accenture takes on the multivariate testing that looks at what improvements need to be made to the site and how they should be deployed. “Just moving things around on the page can make a big difference to how the customer perceives the experience,” O’Rourke points out. Equal Experts provides technical leadership, delivering complex projects like O2 Priority, a loyalty app that since 2011 has been giving customers special offers, free stuff, 48-hour preview access to Channel 4 TV content, concert tickets and a deal where you can get lunch for £1 on a Monday from a number of partners such as Boots and Dominos. Understandably this is very popular, so traffic peaks on that day. “You can’t manage that with
West side atrium
on-premise infrastructure,” he stresses. “Every Monday we use the elastic cloud to meet that massive peak in demand and on a Tuesday we can bring it back down with no penalty. It meets our needs at the lowest possible cost.” Underpinning the digital future is the need to operate the IT estate efficiently and effectively, delivering great customer experience, not just infrastructure availability. Quality is critical. Lisa Turpin’s IT Service, Sourcing and Delivery team work key partners such as Tata Consultancy Services driving efficient and effective infrastructure, IBM, which is Telefónica’s long term partner for billing services and manages the core of O2’s consumer estate, NTT DATA
Video: O2 offers its Priority customers the chance to win tickets to film premieres, such as STAR WARS: The Force Awakens
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TELEFÓNICA UK
Telefonica’s Quality Assurance Strategic Partner of choice Cost effective; TCO for Quality reduced by 30% over the last three Customer experience; Zero major defects into production over the last three years Robust delivery; 99% SLA compliance over the last three years
“With NTT DATA as our partner of quality assurance, I feel safe in our promise to continue to deliver a great experience to our customers” – Brendan O’Rourke
Top 10 global IT services and consultancy provider (Gartner)
Global innovator spending $2.2B on R&D a year
NTT DATA Local delivery built on the foundations of Japanese quality
Our Core Values Clients First
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Innovation
Teamwork
who is our custodian of quality ensuring the customer experience is protected and Tech Mahindra in the Operational Systems space help us ensure success for our customers in the services we deliver. The relationship with these partners will be much more than simply a matter of buying in services. “They care because we are a big contract for them; we care because they are strategically important for us,” he explains. “Over time we intend to move towards a fewer number of suppliers, more value based contracts, and more scope so you get a better peer to peer relationship.”
O2 has had continued success, winning awards for its range of online products
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TELEFĂ“NICA UK
Communication service providers need to respond fast to changing customer preferences. There is a certain way. In a fast-evolving marketplace which demands leadership that brings results, there exists a way of certainty: Tata Consultancy Services (TCS). With TCS as your strategic advisor and partner, the ever-changing new landscapes of business become new vistas of opportunity. From digitally connected consumers to Big Data to emerging markets to end-to-end solutions for transforming your organization, TCS offers you market-proven, world-class experience, expertise, and guidance to show the way for your business to evolve. TCS has been a Production and Operations Management Partner in Telefonica UK's journey to a leading digital communications company. TCS' telecom solutions help you redefine your markets with innovative solutions that help you become more agile, reduce fixed operations costs, and introduce next generation services. Visit www.tcs.com/industries/telecom and you're certain to learn more
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Looking ahead Nobody can predict how O2 will stand in a Copy year’s time. If theNagesh sale goes ahead aRevised blend with Li Ka-Shing’s Three will make it the UK’s largest operator , but for now that is speculation and a job remains to be done. The last year has been one of solid achievement for the company, winning awards for its digital programme, for example Website of the Year which it recently won again for the second year running and Business Service Innovation Award at the Global Telecoms Innovation Awards 2015 for it’s Digital SMB proposition. Awards like these recognise Telefónica UK’s progress in capturing digital omnichannel traffic, all the real world and webbased places where the company interfaces with its users. “In company with some truly outstanding partners, we have become the leader in the mobile omnichannel,” says O’Rourke. This is supplemented by an outstanding inhouse team from the top floor to the shop floor, to whom Brendan O’Rourke gives every credit. Earlier this year leadership was strengthened
DATE
REMARKS
23/11/15
Copy/emailId change
Awards in 2015 • Website of the Year for the second year running • Business Service Innovation Award for its Digital SMB Proposition
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O2 is a leading proponent of flexible working and BYOD (Bring Your Own Device)
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by the appointment of Jennifer Rigby, formerly Director of Corporate Security at the Home Office, as Head of IT Channels and Innovation and her work has already been nominated for Women in IT Award 2015. And O’Rourke is particularly chuffed that two of his younger staff were shortlisted for the prestigious BCS IT Awards this year, Anna Watson for IT Manager of the Year and Kevin Condliffe for Young IT Professional of the Year – this is a tribute, he says, to the O2 talent management process. Also critical to O2’s success is the ability to provide their employees great tools for the job and a great working experience, “We have been leading proponents of remote working and Bring Your Own Device (BYOD) and such flexibility is highly appreciated by our people. We are continually driving new tools into our business; we have become great adopters of Lync (Skype for Business), Yammer and most recently OneDrive.” With companies such as TechMahindra, O2 are looking at how they can
leverage their own Internet of Things capabilities to make their facilities smarter, providing richer, more engaged experiences for their employees. Telefónica UK’s revenues have grown annually over the last four years and that’s set to continue in 2016. “We are heading toward a more collaborative form of engagement. The next step is consultative IT that helps the business differentiate through technology – ensuring that the boundary between the business and IT really blurs,” he says. In the end it is all about a great customer experience. Without that there is a declining business or no business at all. “We drive everything from customer insight and my IT team’s job is to guard that customer experience. That experience is what underpins the O2 brand, which is why where other businesses put the business first, and minimise corporate risk, we put what is right for the customer first, and limit their risk.”
“We are heading toward a more collaborative form of engagement. The next step is consultative IT that helps the business differentiate through technology – ensuring that the boundary between the business and IT really blurs” – Brendan O’Rourke, CIO
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TELEFĂ“NICA UK 260 Bath Road, Slough, Berkshire, SL1 4DX, United Kingdom www.o2.co.uk