Tuesday, April 24, 2007

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BT Sets Sights On Software-Based Broadband Services

BT, in another major restructuring, unveiled a pair of units to "create, deploy and operate" software-driven broadband services across its shiny new 21^st Century Network (21CN) that has begun rolling out but that won't be finished until 2011.

The new units will start life with a massive staff of 20,000 employees, culled from BT design, operations, IT and networks units.

The units being created are "BT Design," responsible for the design and development of new services, and "BT Operate," responsible for the deployment and operation of those services across all of BT's existing units: BT Retail, BT Global Services, BT Wholesale, and Openreach. With sexy new services now coming out of the newly created units, the existing units retain their marketing, sales and customer service responsibilities.

BT says the creation of the two new units is "designed to accelerate BT's transformation into a networked IT services company, delivering software driven products over broadband." The company did not discuss any costs involved with the formation of the new units. It also didn't indicate any involuntary personnel terminations; however, it appears some job positions will be eliminated, and internal retraining will be the order of the day.

Both new units will report to Andy Green, currently CEO of BT Global Services and who now becomes CEO/Group Strategy and Operations. Francois Barrault, now president of BT International, replaces Green as CEO of BT Global Services - currently an $18.4 billion-per-year operation, although how much of that moves to Green's new units remains unknown; he also joins the BT board. A new president of BT International was not named. Green's new stature also led to some inevitable speculation that he is being groomed as the successor to CEO Ben Verwaayen, who came to BT in February 2002 and who has overseen a turnaround and transformation of the company during the past half-decade.

"This is the second phase of BT's transformation," said Verwaayen, unveiling the restructuring. "The first phase saw BT shift its focus from narrowband to broadband. This next stage is equally important. It will see BT advance from a 20^th-century, hardware-based company to a 21^st-century, software-based services company. In a software-driven world, services will be available in real time and around the globe, harnessing the potential of BT's 21st Century Network."

"BT has built a fantastic business by being the first to recognize the growth potential for networked IT services," added Green. "My challenge is to help keep BT ahead of the game."

The BT restructuring won immediate applause from at least some analysts. "In our view, the future of telcos (particularly incumbents) is dependent upon their ability to reinvent themselves in this new era of hyper competition," wrote Ovum Telecoms Practice Leader Mike Cansfield following BT's announcement. "Putting someone in charge of transformation is hugely significant, as it illustrates that BT understands this imperative."

He continued, "All in all, we think this is the right thing to do and a bold move on BTs part. Our only real concern is whether this upsets the balance that has existed in BT over the past few years. The new division will be a very big battalion, with a very challenging remit. The transformation necessary will not be easy and will cause tensions."