BT shares cost cutting experience in new white paper

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BT is advising business how to cut costs in a tough economic climate in a new white paper: Crisis or Catalyst? Lessons from the frontline of cost transformation.

The report draws on the company’s own experience in reducing operating costs and lessons learnt in public and private sectors.

In the foreword to the report BT says:

“There’s no denying it – the last two years have been challenging no matter what business you’re in.

“And now the government has given companies new challenges to think about. VAT is set to rise – the British Retail Consortium thinks this could depress demand by £3.6bn over four years and cost 163,000 jobs.

“And public sector budgets aren’t just going to be pruned, they’re going to be slashed. The amount spent buying goods and services – £220bn in 2008/09 – is an obvious target, and is bound to be scaled back.

“Suppliers will be asked to do more for less, and this will have knock-on consequences for the economy as a whole.

“Overall, the Office for Budget Responsibility thinks as many as 400,000 private-sector jobs could be lost.

“Expectations of what business will be able to achieve are nonetheless very high. The Government wants Britain to be “open for business” – to be a world-class trading nation in every sense. It wants to “create the most competitive corporate tax regime in the G20”, which will certainly help but there’s no escaping the fact that a great deal more will need to be done.

“As of 2008 – the most recent year for which comparisons are available – Britain was 15% to 20% less productive than competitors including USA, Germany and France.

“If we are truly to position ourselves ahead of the pack, productivity, performance and levels of customer satisfaction won’t just have to be improved, they’ll need to be transformed. In short, we need to use Britain’s financial crisis as a catalyst for change.

“Even today, though, it is relatively rare for organisational-transformation programmes to succeed. Many surveys put the success rate at less than 40%. In this context, BT is somewhat of an exception.

“Over the past 18 months, BT has reduced operating costs by £1.8bn, reduced its workforce significantly and restored its loss-making Global Services business to profitability, introducing seismic changes while keeping its employees on board and maintaining service to customers.

“We learnt a great deal from working with our public and private sector customers. In this paper, we explore these lessons and describe in some detail how we applied them to our own business to drive a rapid turnaround. In particular:

1. Transformation requires some tough choices. People will find reasons to avoid it and these must be addressed

2. People are the key to success, requiring visible leadership at all levels

3. It is possible to cut costs while improving services at the same time

4. Good examples of productivity improvements in industry can be emulated

“We share the Government’s desire to get our economy back in good shape. We can, and want, to help. More importantly, we have the skills and experience to make a real impact. So, call us – it’s good to talk.”