Has BT Global Services turned a corner and if so what corner?

A colleague sent me an article written by IDC analyst Douglas Hayward about BT Global Services.

The IT outsourcing arm of BT has had a pretty bad time recently. In 2009 it lost £1.2bn due to cost overruns on big contracts with the NHS and Reuters and another £100m on other smaller contracts.

BTGS was inevitable going to see some changes after it appointed former EDS executive Jeff Kelly as CEO In January last year.

Former EDS Financial Services head Jean-Louis Bravard, who is now director at sourcing advisory Burnt Oak Partners, told me at the time that if anyone is capable of turning BTGS around it is Kelly.

“It is an enormous challenge but if somebody can run BTGS it is definitely Jeff Kelly.” Bravard said Kelly’s experience running the general motors account at EDS will stand him in good stead. “This is a massive contract that few could run

Read Hayward’s article below and let me know what you think.

BT Global Services Clarifies its Market Strategy

By Douglas Hayward, 27 April, 2011

Top Line: BT’s return to basics should be a good thing for its customers.

We recently attended a briefing hosted by BT Global Services, discussing the company’s UK operations and its government and healthcare operations globally.

Overall, we think that BT Global Services has regrouped around a pragmatic market approach that focuses on selling its core network-centric services using IT services in a supporting role. This, combined with a major sales push in the UK to recapture lost market share among currently under-served customers (including recruiting an extra 200 sales staff in the UK alone) looks to us like BT is going “back to basics” in its approach to enterprise customers.

Bottom Line for ICT buyers:

1. BT in 2011-2012 will be more aggressive in selling its core products – specifically, voice and data services, but also network-centric offerings such as conferencing and telemedicine. It wants to sell more network-related professional services, for example marketing its cybersecurity consulting services, and it also aims to re-use its network assets better, such as marketing its DFTS (Defence Fixed Telecoms Service) offering to the criminal justice system. For enterprises and public bodies, all this should create more choice, assuming that BT does not overstretch itself and that it can replicate its offerings efficiently between customer sets.

2. A side issue is that BT is getting serious again about selling BPO (business process outsourcing) services, at least in the UK, where it is recruiting staff from the likes of Serco and Capita in order to bid for more BPO opportunities. This looks to us like make-or-break time for BT in BPO: if BT can pick up more of these deals, then fine. If it not, then we’d not be surprised to see the BPO operations quietly parked to one side and eventually run down as contracts come up for renewal. BT is no doubt serious again about BPO for now, but its long-term commitment to this sector still remains in the balance.

3. Is BT serious about IT services, and has it sorted its troubled relationship with IT services? We think the answers here are positive. It has pulled back from its overblown former vision of “networked IT services” (to which it still pays lip service) and its core focus now look to be very clearly the traditional voice and data network services offerings, supported by consulting and IT services. This “return to basics” gives BT a clearer, more sustainable and more realistic positioning in services to enterprises, contrasting positively with the failed dash for revenue growth in the middle of the last decade that saddled it with unsustainable low-margin ICT contracts. For BT’s customers, clarity and sustainability of offerings must surely be a good thing.