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June 21, 2016updated 21 Oct 2016 4:38pm

BT’S CEO of Global Services on digital transformation, strategy, and putting the network at centre of everything

Exclusive CEO Briefing: Luis Alvarez is a former CIO who believes in strategy, not digital strategy

By Sam

Luis Alvarez, CEO BT Global Services was once a CIO and says he feels privileged to have had the role.

He uses the insight into the challenges CIOs face to shape his company.

"I have the luxury of having been a CIO. I feel privileged because I have had that experience. I believe that CIOs have been driving innovation for many years so it is unfair to suggest that they have not been forces for change across many industries. What is different now is that it is more visible across the organisation. This is an opportunity for the CIO. The good CIOs understand the business very well. And they can connect the dots," he says.

Mr Alvarez equates today’s CIO role with that of a parent of an adolescent.

The business sees lots of technology it wants to rapidly adopt but the CIO as custodian of the firm’s critical data must address ‘allowing the teenager to fly and go alone while keeping a degree of control.’

"That is the challenge for CIOs because this environment is more agile and flexible and requires a lot of speed. It’s a challenge for CIOs to embrace that without losing control of the things that are his or her responsibility."

For some, he says, innovation is doing whatever you want. Innovation is to be faster and change the way you do things ‘but you need to retain control.’

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That’s the boring, hard bit.

Whether a CIO works for of a bank, an insurance company, in pharma or oil and gas they must join the dots and understand the business intimately.

"You need to understand the risk of your customers in a bank when you provide loans. In pharma you need to understand drug testing, because you are responsible for that sensitive data. In an oil and gas company, you need to understand exploration data. It is the owners of that data for who you must keep that data protected. The CIO must understand the core of the business."

Strategy, not digital strategy

Now, more than ever CIOs are being asked about strategy.

For a technologist Mr Alvarez offers a refreshing view: "I don’t believe in digital strategy. I believe in strategy. A company shouldn’t think: I don’t have a digital strategy, a company should think I have a strategy and digital is part of that."

He says digital disruption is just another component of what is happening. It is not going to be the only thing.

So how do companies transform, have companies identified digital disruption as an issue?

"There are areas where digital transformation is happening. Video, audio and instant messaging are all the collaboration tools.
Transformation is changing the way companies internally operate and in some cases this is allowing them to be faster. You have companies as big as Unilever setting prices in any part of the globe through a central space," he says.

Another transformation is the way companies interact with and around customers says Mr Alvarez citing the way airlines and banks are really changing.

"We’re doing a nice project with Nationwide around their network and now they are using video to really help advisors in branches. It was talked about years ago but it never really worked. And thanks to the infrastructure that is in place now the business is being disrupted because they can show the value of having the conversation with the experts on investments or mortgages. For example a customer may come into a branch and say, ‘this is my situation, what can you do.’ The guy in the branch does not always have the script of what should be done and what is best for the customer. So by using video communications you materialise the business and shorten the cycle."

Another transformation type is IOT. The world’s largest fertiliser company has bought sensors for plants and now with drones it can direct the fertiliser to where it is needed. F1 racing team Williams is using more information and starting to use to use 3D printing.

And that is disrupting the supply chain.

There are lots of good examples of companies which change the model of how they sell and changing the model from selling goods to selling services, he says.

Network

For BT Global Services it is modernisation of infrastructure in terms of networks and transformational outcomes that drive new business opportunities and models.

"Our perspective is that in an environment where there is more and more connectivity the network is absolutely critical. So I think there is a big play for the network. At the core of this digital transformation having the network right is core so the information can flow and so the applications can operate properly. At the core of our Cloud of Clouds strategy is the network."
Most companies will not have a unique solution but will have a blend of services. They will have MS365 for email, Amazon Web Services for a couple of applications and they will have their own data centres for legacy applications they will continue to use. For those who need to locate data locally, they may use BT data centres in Frankfurt, Germany

"Companies are integrating with audio conference, contact centres and data analytics. You have one environment which is like a private club where you have access to everything that is available in the market. So you have the menu of the portfolio applications. What is important for the CIO is that they have the choice of linking to what is best in the market."

To the question of who builds the holistic strategy Mr Alvarez says BT Global Services is an advisor.

"To some extent we are a trusted advisor on what we call the cloud roadmap. A bank may say ‘this is my suite of traditional banking applications serving my branches. This is how my contact centres are working. Now customers need to access any service anywhere. And the quality and security of the infrastructure has to be paramount because of the regulatory environment. So BT Global Services defines the model. How to integrate and define for the new services which include new payment models and connection to the SWIFT network? We help them define that."

BT Global Services is still signing long term deals with big companies over five and seven years but deals today are different from old school outsourcing aggrements.

For many the old days of outsourcing are gone and the requirement now is for flexibility in services such as pay per use contact centres so customers don’t have stranded assets.

"It is a journey. You have customers in different moments of that journey. Some are just ensuring that the brilliant basics are really working. Some are being more innovative everywhere. Some are just doing that in some areas of the business," he says.

But whatever the business is talking about it is not a six month change.

"They are not just moving into buying commodities. We’re in the first step of the corporate cloud. So the dynamics are changing. We are probably in the best position. We understand the network very well. We are not competing with Amazon or Google so we are enabling them so they can access corporate customers and corporate customers can have access to them. We leverage our understanding of the dynamic."

"So we keep have long term engagement with our customers but it is about creating that agenda."

Internal Change

The cloud agenda is changing BT Global Services’ business because it is changing what and how its sells.

If it is selling a contact centre it would once have sold one at £10m for the contact centre and a three year maintenance deal. Today says Mr Alvarez what is happening is it asks; "How many agents do you have today? What’s your call volume?" And it will be delivered on a pay for use basis. For others it may charge by the outcome. Not by the number of loans a bank makes but by the number of engagements achieved.

"It is changing the model for us," he says.

Transformation means making some big bets for a firm that is as large as BT.

BT, he says is all about leveraging parnters in its Cloud of Clouds ecosystem and being able to connect to partners with security and performance.

"Our first clear bet is we believe in the network. Any of the technologies we are discussing require a solid robust well performing secure network. So I think the first set of investments we make is ensuring the quality of the network supports the interactions of our customers internally and externally. That it is working extremely well and can capture increased volumes of data."

"It doesn’t matter if you have a fantastic application on AWS, if it is slow and unsecure and you cannot put your data there safely you will never use it."

"Look at the investments we are making around security and cybersecurity, this is a key area for us. Doing a lot of investment on convergence so whichever device you want, this is convergence. Third area is collaboration – around tools for productivity to help our customers extend their services and models."

Quotes from Luis Alvarez

"Since Uber is in the market, taxi drivers are taking care of customers in a much better way."

"Regulators are having to think about whether they are putting barriers in place which is stopping business and innovation."

"In South Korea, any company can open an online bank except the existing big banks. So that is an opportunity to force the acceleration of the financial services industry. "

"The devices you have, suddenly they start taking care of your health. If you are willing to share the data an insurance companies
can say you are living a healthy life and your premium will reflect this. It makes sense to reduce your life insurance."

"We should be able to share more. We should encourage young people to share more. As an industry we have a responsibility to say this is good and create new things."

"Develop telehealth and teleeducation. Let’s share what it is possible to do and help the people who currently don’t have access to these technologies."

"Provide a digital bridge in society."

"It is fascinating how the conversation now starts with those that come to BT Global Services for jobs. It begins with ‘we use power of communications to make a better world. If you don’t link your business proposition with your role in the society and the world you will not attract the new talent."

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