Strategy & Service Introduction

1. Strategy & Service Introduction Roadshow Overview

2. The story so far October November December January BT Tower pilot Adatstral [2] Edinburgh Faraday[2] Bristol Cardiff Birmingham [2] Helston Baynard [2] Sevenoaks Leeds Adastral [2] Brentwood Newcastle Adastral [2] Baynard [2] MK Seen 207 487 626 705 • We asked everyone.. • % • Was the event a good use of your time 98 • I felt you listened to my ideas and opinions 100 • You clearly and honestly answered the questions I asked 100 What key message did you take away from today? • We need a large change in the way we do things. • There are positives that things may actually. change for the best. Would be great. • Sense of direction and empowerment. • Don’t provide reams of evidence for performance. • Good discussion with Dave + senior team. • We’re all involved in delivering the required changes. • A new direction, more customer focussed. • A clear view of the issues facing us and I look forward to how to make this happen. • Change is needed. But needs to be done correctly • Don’t accept continued working with broken processes. • Take responsibility, recognise your influence and make a difference. • S&SI values the opinions of people who work here. We can all help make it a better place to work.

3. The Purpose of the Roadshows • To ensure we all have same understanding of current position of BT and future strategy • To explain what this means for BTO • How this impacts on us as a unit • What this means for you • What you think needs to change • To seek your commitment to the journey ahead

4. Our Achievements IT Capacity Driven outages driven down by 98% Helped Operate complete its ‘unfinished business’ 90% reduction in P1s Renewed our ISO 9001 certificate More than 200 contractors replaced by BT CTC We created the PSIM role E2E Test ITT Achieved 345 professional accreditations Introduction of PLSD achieving 15% reuse in first 6 months Better early life cycle engagement Eg BPMS & MEAS 74% reduction in Test off-shore costs 40% reduction in server provision times We play a central role in shaping Operate 2014 Fibre Exchange strategy created C2M pipeline 100% underpinned with RFT and P1 targets We’ve had some great Challenge Cup teams Developed the OLAs to support London 2012 1000 FTE benefit delivered across Operate through PRE and Automation £11.8m opex savings, 5176 servers de-commissioned and 54.8 Gwh/a energy reduction We run the Operate wide CAPEX demand assembly and Star Chamber We’re Operate’s business and architectural advisors on 21CN and 20C PSTN sustain

6. FTE & extra bubbles A changing organisation 83% Management (48% BB1, 45% BB2, 5% BB3) And 17% Team Members We’re spread across 154 BT UK Buildings Represented in 6 countries With 179 home workers And over 200 of us are based in Adastral 45% of us are over 50 Between us achieving 345 professional accreditations over 3 years 80% are Male 20% are Female There are 6 Doctors in SSI But only 3 individuals are under 25 With an average Length of Service of 24 years 48 of us have given their time this year on volunteering activity And finally the most popular name is David 

7. Where are we - 2011/12

8. You said We need more empowerment if we’re going to be agile and entrepreneurial No chance of contributing to core targets because we’ve been put in roles/projects that don’t fit the norm We wasted time waiting for McKinsey’s output I work in a supportive team where we all respect and help each other I have a great manager I now have the tools required to do the job Ifeel empowered to make decisions irrespective of my grade We’re spending too much time driving broken processes There’s too much paperwork to complete to get anything done Everything we do is too complicated and political Performance management gets in the way of everything I love working for BT Too much work, too much pressure, stressed, frustrated

9. What our BT stakeholders have told us We need to improve is in the VDC environment Improve non functional testing and test environments Alignment with BTID I value the bid input you deliver Timely Introduction of new products and services I appreciate the willingness to work together to solve problems . Focus and drive to get better C2m process. Do what is right for BT and not (just) BTO/SSI. Think E2E availability and performance of test environments has been the Achilles heel Drive more urgency in BT overall is needed. Coordinate – Non functional releases through testing and into deployment Say No include architectural documents in process delivery. Testing. We need to step up (think of Accenture reports) Improve MDSO engagement and ownership Front door in terms of aligning all resource elements. Again big step up needed. what is SSI? Close coordination of large and complex releases . ensure business process and operational procedures are drafted . VDC the process is tricky Engage with the line operational folks impacted by your work/delivery Setting and aligning on priorities I value the rigour that BTO bring to the testing process. Proactive engagement in requirements and raising issues much in advance of the launch I would like to see now is strong programme management in the execution

10. BT and Operate 2014 SSI is BT Operate’s Engine for Generating BTs Future Growth • Understand future demand and match with capable resources • Continuously improve the C2M process to exceed time to market expectations • Architect lean processes that maximise customer value add and are waste free • industry leader in test/unit cost • Rationalise our computing and exchange estate • Go beyond the needs of our internal clients • generate increased capacity to insource future work. • Create a people agenda where SSI is recognised for people excellence C B A D

11. Our priorities This means… Customer …delivering services that delight our customers Grow external customer satisfaction by 5 points Make BT Operate the partner of choice for the MFUs thus halving external market share …becoming easier and straightforward to do business with Costs …cutting out complex process making the way we work simpler and more straightforward Reduce Cycle time of our core processes by 50% Improve our productivity and thereby reduce unit costs by 50% …reusing what works and automating the low value repetitive stuff People …making S&SI a great place to work[after all there are only 700 of us] working closer together, better line management, and pride in what we do Create a superior employee experience

12. 1. Become easier and straightforward to do business withMake BTO partner of choice for MFU’s thus halving external market share • Redefine how BTO manages complex bid delivery. • Commercialise customer management • Drive Prime contractor model • Test as an external Product • Making the Front door invisible DeliveringBT’s growthOperate’s vision is to be: A trusted partner delivering exceptional and competitive service to our customers

13. 2. Delivering services that delight our customersGrow external customer satisfaction by 5 points • Drive technology strategy based on user operability • Get customer connected-“Go See” across the whole team • Communicate BT performance and customer complaints • Sample our internal client satisfaction with what we do

14. 3. Cut out complex process and make the way we work simpler and more straightforward Reduce cycle time of S&SI core processes by 50% • Apply lean across the Unit processes • C2M lite and driving re-use • Re-shaping processes and automation of standard provision of IT • Models to drive demand to supply conversion of customer demand

15. 4. Reuse what works and automate the low value repetitive stuffImprove S&SI productivity & thereby reduce unit costs by 50% • Operate great test factories • E2E review of waste in C2M delivery • IT Provision automation and tools • Drive re-use of code and processes • Production Management Automation

16. 5. Make S&SI a great place to work and pride in what we doCreate a superior employee experience as measured by EEI>4 • Creating a Professional Services orientation • Make sure you know what is expected of you • Manage ourselves and our people more effectively • Develop talent & maintain your focus on skills enhancement • Follow through on actions

17. The work we do is very similar to a Professional Services organisation and there are some things we can learn from them… BT PS Our Focus Lots of time spent on internal governance, rework, politics, reviews Minimal time spent on tasks that the end customer would not pay for 1 2 3 4 5 6 7 8 9 10 BT PS Success based on customer outcomes Our Measures Success based on internal measures not well-aligned to customer success 1 2 3 4 5 6 7 8 9 10 BT PS Right people, right roles, high standards, continuous self-development Our Team Make do with the team you have, 50% skills matching, job standards 1 2 3 4 5 6 7 8 9 10 BT PS Differentiate ourselves from our competitors at all points in the journey Our Standards Keep up with our competitors and cut costs/corners wherever possible 1 2 3 4 5 6 7 8 9 10

18. Lean Service Behaviours – an overview Making processes more efficient Managing our performance Ensuring we have set clear ways of doing things so that we know what's expected and everyone can measure how they're doing. • Using Lean Service tools to get rid of waste and make the process better . • Assessing how we're performing Understanding what the customer needs and making improvements to enhance their experience of BT. LISTENING TO OUR CUSTOMERS Organising our people and developing their skills Having the right mindset • Always looking for better ways of doing things. • Taking responsibility and feeling bold enough to try new things. • Learning from mistakes and looking for feedback. • Sharing what you know about how to get things done in the best way • Getting better yourself too • Helped by senior leaders who make sure we have everything and everyone we need. 18

19. Next steps • Turn our priorities into mile-stoned plans • Action feedback from today • Agree priority barriers WE need to overcome and how we will do that • Improve communications on progress and plans • Your commitment

20. Strategy & Service Introduction Questions?