Q&A: Vodafone

About the Company

With a market capitalisation of £80 billion and revenues of £29 billion, Vodafone is the world’s largest mobile communications company. Springing from its roots in the UK, it has doubled its customer base over the past five years to around 190 million, expanding into most European countries, Australia and New Zealand, and pushing into the US through its 45% stake in Verizon Wireless.

But Vodafone is under competitive assault from all sides. As the market matures and customers are drawn to new, multimedia services, the company needs to capitalise on its hefty investments in 3G networks and expand its franchise within the enterprise through the delivery of broadband services to laptops and mobile devices. And it has to do all these things while cutting costs.

In the UK, where Vodafone has 16.3 million customers (60% pre-pay), that 3G footprint now covers 60% of the population. As chief technology officer for the UK, one of Paul Wybrow’s key responsibilities is to ensure that the company delivers the most compelling advanced mobile network service to that audience. At the same time, he is also charged with overseeing Vodafone UK’s IT operations from the company’s headquarters in Newbury. That puts him at the head of an IT and communications workforce of 4,500, 38% of the company’s 10,500 UK workforce.

Even as it intensifies efforts to bring new services to market more rapidly, changes within that IT organisation reflect the company’s desire to match its cost structure to the maturing market.

Already, Vodafone has indicated how it will remove between 25% and 30% of its £320 million annual data centre spend in Europe over the next two to three years, largely through a massive consolidation programme. It has also embraced outsourcing in a significant way: starting in early 2007, IBM and EDS will provide the bulk of application development and maintenance services, an area where Vodafone says it spent £560 million in fiscal 2006. It reckons that shift will reduce unit costs by 25% to 30% within three to five years.

Information Age (IA): You seem to have multiple roles within Vodafone; how does your broad set of responsibilities fit together?

Paul Wybrow (PW): I’ve got a number of distinct roles. Firstly I’m a member of the UK board. I also have a company-wide role to look at the impact of technology on the business, [and gauge] where the market is heading. And allied to that, there is the functional domain: the ‘normal’ IT, focused on making the organisation as efficient and cost-effective as possible.

IA: Does working for a technology company colour that activity?

PW: Currently, the rate of change in our market is phenomenal; that means we have to address the issue of innovation. The telecoms industry is in the middle of a price war, so we need to be efficient, but also make sure we have the right capabilities in place to bring the right products to market. Our new mobile broadband [Vodafone’s HSDPA network] is a case in point.

As a whole, the mobile industry, up to 2000, experienced massive growth. Back then the priority was to drive and manage that growth. Cost was very much a second priority. As the market has matured, we have had to refocus: it’s no longer just about growth, but about customer experience. That has certainly made it a challenge, but it means we have to make sure that we are as fit a company as can be.

IA: In what ways has that changed your outlook?

PW: For us, it still comes back to that balance of cost and innovation. So we’ve invested heavily in our network, and we’re using that to drive business improvement; moving from a POTS [Plain Old Telephone System] to an IP world. We’re in the middle of a huge transition as we migrate from 2G to 3G networks. On the telecoms side, there’s a huge amount of infrastructure that supports our networks. We have vast server farms, and we’re looking to rationalise all of it.

Three years ago we produced a five-year plan to dictate how we build future networks, ensuring that there was the incremental investment that would enable us to end up with an architecture that gives us scalability, and is enabled to handle 3G data and 3G broadband.

On the IT side, this has involved a complete data centre refresh. We’ve basically moved from 37 physical locations to 15. Even that’s not ideal, but we had previously acquired world-class data centre facilities in Dublin, so we’ve moved some of our [Vodafone] Group shared services infrastructure there, with the exception of parts that we need to keep close to the network. We’ve also got major hubs in Germany and Italy, as well as disaster recovery sites.


Name: Paul Wybrow

Company: Vodafone UK 

Title: CTO

Key challenge: To ensure that the technology underpinnings of the business can respond to the rapidly changing competitive environment by delivering innovative, compelling, cost-effective services.

IA: To what extent has the well-publicised ‘energy crisis’ in the data centre affected your thinking about the rationalisation project?

PW: For the last three to four years, we’ve seen the issues [of power and cooling] in the data centre just continue to grow. In part, that’s related to our organic growth as a company, but also the issues around power – getting the right feeds in, getting the airflow right to manage the heat being produced – it had reached a stage where we had to take decisive action. Not all the facilities we had were best-in-class, and fundamentally, a lot of them were simply full.

IA: Data centre consolidation can be an extremely painful process. How did that plan fit in with the overall company objectives?

PW: As a business, there’s not one bit of what we do that isn’t being re-organised. The IT function is being asked to deliver far more into the business than it has ever done before. As a business, we are delivering new services into the market every month, and we have to play our part in supporting that.

But the data centre project gave us a real chance to improve our operational capability. We’re looking at delivering major cost efficiencies through the move, which helps. And it also gives us the opportunity to have the infrastructure that can really support the business.

Our aim has always been to be best-in-class when compared to our competitors. We’ve achieved that in time-to-market for new customer products and services, but we’ve not always been as cost efficient as we need to be. We also need to ensure that we continually improve our time-to-market, to keep our advantage.

IA: How will that focus on cost effectiveness play out in the future?

PW: Part of that is reviewing what we do in-house. Technically, there’s no doubt that the team are capable and savvy, but for the business, we need to consider where these skills can provide a competitive advantage. It’s a cultural change, to focus on the things that can differentiate us as a company.

So we will be looking to outside services companies [Vodafone has recently signed agreements with EDS and IBM for application development and maintenance services], as well as to build on our capabilities in-house. One area would be programme management: it’s an area that can help us differentiate ourselves in the market, and add to the strength and depth we already have.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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