INNOVATOR S PLAYBOOK A TALK WITH GLOBAL LEADERS BRITISH TELECOM (BT)

INNOVATOR S PLAYBOOK A TALK WITH GLOBAL LEADERS BRITISH TELECOM (BT) How does one of the biggest telecommunications organizations in the world continually ensure that its customers receive the best service levels possible? Oracle s Bob Evans talks to Jean-Marc Frangos of British Telecom about the innovative technologies and ideas that are keeping BT ahead of the game. 2

READ THE INTERVIEW HERE Bob Evans: Hello, everyone. Welcome to Innovator s Playbook. I m Bob Evans. In this series we re talking to global business leaders to find out how technology helps them innovate. A recent study from the Economist Intelligence Unit finds that some technologies have a bigger impact than others. These include cloud, mobile, social, big data and analytics. In today s interview, we ll be talking about innovation around customer experience. Joining me now is Jean-Marc Frangos from British Telecom, also known as BT. Jean-Marc is Managing Director of External Innovation with BT Group, one of the largest communication companies in the world. Jean Marc runs the Open Innovation Team at BT. Jean-Marc, thank you for joining us today. Bob Evans: Can you tell us a little bit how the needs of the business have changed and the needs of your customers changed in the past two or three years? Jean-Marc Frangos: What happened over the last few years and for most large communication companies is [moving] from a very network-centric approach, from a very infrastructure-centric approach to a much more agile, shorter-cycle software company, where we have to respond to the needs of our customers in value-added services, whether they re ready to consume services in their home, to connect their tablets or smartphones to their home network. Jean-Marc Frangos: You re welcome, Bob. Bob Evans: Could you tell us a little bit, please, Jean-Marc, about BT and the business and your role there? Jean-Marc Frangos: BT probably one of the largest telecommunications companies in the world based in Europe, but probably worth saying that it s a very global company. So we operate in about 170 countries, we have about 90,000 employees. We have OUR CYCLES ARE REALLY FAST. AND THAT S WHY INNOVATION IS REALLY IMPORTANT. about $30 billion turnover, revenue. I would say nimble, and certainly in the area of telecoms, there s never a boring day. I m part of what we call the TSO Technology, Services and Operations team. It s the largest part of the company that does technology. In fact, that s all we do. We do the technology, we create, design the new services and the new networks and we put them in; we operate them, as well. So it s a large, 18,000-people organization. And we deal with innovation and we deal with creating new services for our customers every day. These are very, very short software cycles as opposed to the 10-year or 20-year type of cycle in which a fiber investment would make sense, for instance. So it s like having two companies in one, but that turn has been very significant for us. Our cycles are really fast. And that s why innovation is really important. Bob Evans: Tell us a little bit, please, Jean- Marc, about how BT defines customer experience and how you try to ensure that you re delivering the highest possible customer experience? Jean-Marc Frangos: It s really important because we re a service company. So a service company means we have a lot of interactions with our customers. We bill them regularly, of course, and they like to discover the new services we offer. They also like to interact with these services, change things. They also have questions about our bill. They also have things that sometimes go wrong, and they like to call upon us to fix these things. CONTINUED ON PAGE 4 3

So we have a lot of interactions, actually, as a service company with our customers. Customer service for us is essential. And we define it as trying to get it right first time for our customers; in fact, one of our key measures is what we call RFT Right First Time and it means, set it up for our customers right in the first place so they don t have to call us at all about it. Or it means when they need us to do something about their services, it means being able to respond to their requests and satisfy their needs in one single interaction without asking them to call again and have multiple interactions. That s one side of it, which is the RFT Right First Time aspect of it. The other thing that we pay a lot of attention to is what we call Net Easy. And Net Easy means how easy it is for our customers to get hold of us, to get satisfaction [for] the request they have put to us. And we have found that this is a very, very strong predictor of their overall satisfaction and their ability to stay with us as a happy customer. Okay, what is it about? Is it about your broadband line? So they select Broadband, and right after that what happens is, we give them a choice of how they can contact us because that s what we think is really important in terms of recommending. They have multiple ways. They could simply have a chat session with us which, in that case, is the recommendation that we suggest or they could call us on the phone. They could email us. Depending on what type of interaction, what type of question they re going to have, we make that recommendation for them. We use [Oracle] RightNow to run this service to the satisfaction of our customers. Bob Evans: What s an example of the ways that BT has used innovation to improve the customer experience? Jean-Marc Frangos: If we take the example of broadband services, and if we look at a screenshot where a customer, for instance, wants to get in contact with us, what they would see immediately is a choice of, effectively, six contact options. A lot of them, for instance, contact us when they want to change homes, but a number of them also want to ask about new services. In this example, let s say they need technical help because something s not working exactly as they want it. So when they click on Technical Help, we open a new window where we say, THE CUSTOMERS LOVED IT. WE COULD SEE FROM THEIR CUSTOMER SATISFACTION LEVELS THAT THEY WERE MUCH HAPPIER WITH THE INTERACTIONS WITH US. Bob Evans: Jean-Marc, those are certainly some innovative solutions there, and it seems like the perfect time for those because it seems that in the buyer/seller equation, the balance of power has tipped strongly toward the buyer. They are more aware of what their choices are, what their options are, and I think their expectation levels are higher. So could you tell us about a couple other of these challenges that you faced in the customer experience area? Jean-Marc Frangos: You can imagine that with the breadth of services we offer our customers and we go from broadband, telephony, TV, all the value-added services our agents get a lot of questions coming from very different angles. 4

What we found was our agents found it difficult to answer all the questions pertinently, depending on what the questions were. So what we did was work with the Oracle Real-Time Decisions tool, and we implemented a mechanism by which and you see it on the slide right there by which the agents could have suggestions and recommendations that help them make the right choice and provide the right answer to the customer. So that was actually great for the agents themselves because they loved it. They found that it largely helped them in their everyday work. The customers loved it. We could see from their customer satisfaction [levels] that they were much happier with the interactions with us. And, as a result, our main measure I told about Net Easy that NetEasy measure tripled specifically on this very example. Bob Evans: Are there other results from that effort, Jean-Marc, that you could share? Jean-Marc Frangos: When you have customers calling you and they are typically calling you from a first interaction with our online Web site we ve also equipped our agents with, effectively, a tool that allows them to see exactly the same screens as our end customers. Now, what that means is, they re able to guide the customers through the journey online as they re speaking to them on the phone. So that s our Agent.com tool. And so that was effectively something that made a huge difference also for agents and for our customers. Bob Evans: So it sounds like there s almost a never-ending movement of new technologies and new ideas into BT with the solutions you re delivering. What are some other examples of new technologies there? CONTINUED ON PAGE 6 5

WE RE VERY PROUD TO HAVE BEEN THE SPONSORS BOTH OF THE OLYMPICS AND PARALYMPIC GAMES. Jean-Marc Frangos: We recently worked on a new conferencing technology and collaboration technology with a company that most people know about for cinema sound Dolby Labs. And so we ve recently announced a new audioconferencing solution which is going to make it so much easier and so much more comfortable for people on long conference calls. I spend a lot of time on these conference calls every day. And you ll be able to hear people in different quadrants of a stereo headset. So if you re speaking to me on the right and someone else is speaking to me on the left, during this audio conversation, I ll always hear you on the right and someone else on the left. It s incredible the difference it makes when you hear the difference of sound. And it makes collaboration so much easier. Bob Evans: You know, you talk about those things, from a conference call all the way out to one of the world s largest in-person spectacles that s also turned recently into such an online experience the London Olympics in 2012. Tell us a little bit about what that was like for your company. Jean-Marc Frangos: Well, big event. And we re very proud to have been the sponsors both of the Olympics and Paralympic Games. So that was a great experience. It was the most connected set of games ever. I think just on one day of the games we had four times as many social messages as in the whole of the Beijing Olympics. Bob Evans: One day. Jean-Marc Frangos: In one day. It tells you how quickly these things are going. But we had spared no expense in terms of bringing innovation to the scene of the games. For instance, we had Wi-Fi in all the stadiums. So it was possible for someone to be sitting here looking at a particular event say, an athletic event and at the same time check on their tablets or their smartphones using the Wi-Fi in the stadium what was going on with the swimming that was taking place in a different location. 6

That was very cool. Just before the games what we did was, we upgraded our enterprise service bus to the new Oracle version. And that actually helped us with the insane amount of messages and traffic we got on the network. Bob Evans: It s almost like, Jean-Marc, there s a paradox here because on the one hand you ve got to be more capable, more powerful, move faster, serve more people with more sorts of services, more innovation; yet inside your company you ve also got to find a way to simplify the IT footprint and the IT architecture you have. How do you manage that, that juggling act? Jean-Marc Frangos: Recently, we ve been working on our servers in our server farms. We have, as you can imagine, a very large data-warehousing as well as server estate. And we ve been consolidating this. We ve been using [Oracle] Solaris containers to rationalize a lot of our servers. And, actually, we ve been able to achieve ratios of consolidation which are staggering about 10-to-1 in the number of servers. But even more impressive was the ability for us to save energy in doing that. And the ratio of energy saving we derived out of that consolidation is 15-to-1 even better than the server count. When you are able to run more efficiently on your main industrial tool whether we re talking about the network or the servers what it does is, it frees up resources and it frees up money to invest in your services. So we love doing these things. Bob Evans: Jean-Marc, in the context of the business overall at BT what s the role of innovation? How is it helping to change the arc of the company? CONTINUED ON PAGE 8 7

Jean-Marc Frangos: It would be an understatement to say it s in constant evolution. I mean, wherever you turn whether you re looking at Google or other Internet companies or content companies or TV companies there s really a continuum here of the digital lives of our customers, both in their business lives as well as in their consumer and home lives. And that s changing so fast. And they see everything we do as enabling their new life. So for us innovation is really about being at the forefront of being able to respond to their needs, even before they know it, even before they appear. We involve them, invite them to work on prototypes with us, to discuss what they would like to see out of our services very early in our concept-tomarket stage. Bob Evans: Jean-Marc, you participated in that Economist research study about innovation. I know one of the things that you were quoted on in that study is saying, Innovation is not one person s job or one department s job. What advice would you give to C-level execs to say, you ve got to make this an end-to-end initiative across the company? THERE S REALLY A CONTINUUM HERE OF THE DIGITAL LIVES OF OUR CUSTOMERS, BOTH IN THEIR BUSINESS LIVES AS WELL AS IN THEIR CONSUMER AND HOME LIVES Jean-Marc Frangos: The main part of the way we do innovation is really about creating real incentive for everyone in the company to be innovative, not just an ivory-tower innovation team. I mean, that s what we try and I fight against. I fight against the fact that people see me as the only guy who would do innovation in the company. My role is to make sure that everyone is incentivized to innovate, whatever they do in their job. That s what I call innovation as usual. Right? So it s my role to make sure that everybody has got an incentive. And we do it in very different ways. One of the things I like to remind people is that innovation is not just about invention. 8

Of course, there s a very prestigious sparkle of innovation that goes on in a lab somewhere and creates something unique, but in today s world especially for services companies it s really about a very good execution in many aspects of what we do. So when we look at the way we distribute our services we talked a lot about customer service and how we serve customers if we do that better every day than our competitors, that s why customers will want to buy more services from us. Bob Evans: You ve mentioned a couple times that this is not a project that you start on one day, you get to another day and innovation is done. It s an ongoing process. So what do you see going forward at BT in your innovation strategy? Jean-Marc Frangos: Number one is customers, as always. So what I would certainly like to do is to be able to involve our customers even more tightly in our innovation process. I think we re good at this already. As I said, we involve them in multiple ways. We invite them to our Innovation Showcase, and that can last anywhere from half a day to three days, where we do code development with them. But there s always more to do with regards to involving customers and, you know, being very tight with what they want to achieve. The second part is work even better and even more with outside companies particularly start-ups, but also large companies and make sure that we are in sync and have our roadmaps aligned so we can have the maximum efficiency in delivering innovation. Bob Evans: Jean-Marc, thank you very much. This is a fascinating discussion here and great points you ve brought up. I d also like to thank all of you for joining us here today. 9