Eight years ago, 90 per cent of BT’s revenue came from phone calls. Today, phone calls account for 26 per cent of BT’s revenue. With the telecoms firm losing fixed-line telephony business to mobile and broadband, BT has had to radically change its business model.
Convergence has been the biggest driver for change in the telecoms industry. Jim Preston, deputy chief information officer for BT Retail, says it is about convergence in four areas: technology, information, devices and the customer experience.
The second big change is converged information: voice, data, video and music. Nowadays, BT finds itself competing with Sky on its broadband TV offering, BT Vision. Not a traditional rival, but then the field is changing at an alarming rate.
‘Finally, you can get converged devices,’ says Preston. ‘The Home Hub is an example of that, where we can put something in the home that converges devices in the home for you.’ In addition, the customer needs what Preston calls a service wrap around all of these technologies, devices and offerings.
‘The business model within the company can no longer be what it was before,’ says Preston. ‘Historically, BT was very product centric not customer centric. This is one of the paradigm shifts in the business models. We no longer talk about products, we talk about customer experience.’
The catalyst for leading the business model transformation had to come from IT. ‘We used to define, launch and build new products and build the IT capability around it,’ says Preston. But this method of developing software took too long. Projects typically lasted two to four years.
But with these kinds of lead times, BT could not survive. The firm had to get faster, better and more flexible.
BT led the business model change by making IT more flexible. They call this initiative Agile. Ideas are hothoused and developed in 90 days. If ideas do not work, they have what is called fail fast – that is you exit as quickly as you innovate. ‘If we are going to do something, and it’s wrong, we would rather find out within days, not a year later,’ says Mr Preston.
BT has made a remarkable turnaround. It has transformed into an agile giant that is able to generate new revenue streams and experiment with different business models. All of this is underpinned with a flexible IT delivery service.
Since 2003, BT has doubled its share price. But the firm knows that it cannot rest on its laurels, it has to keep innovating its business model if it is to continue to prosper.










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