Vodafone: CTO Restructuring Program

For Vodafone D2, the largest operating company within the Vodafone Group, its technology organization is the all-important engine room. Unplanned growth had made it unwieldy and reduced its ability to support future growth. Vodafone D2’s chief technology officer worked with Accenture to transform the unit’s organizational structure to ensure it was fit to deliver high performance into the future, while also reducing costs.

Client Background

With more than 25 million customers relying on its mobile voice and data telecommunication services, Vodafone D2 is the largest operating company in the Vodafone Group, the world’s leading mobile telecommunications company.

The engine room of Vodafone D2 is its technology organization, headed by its chief technology officer (CTO). This pivotal organizational unit is responsible for developing new products and services, business/operational support systems (BSS/OSS) and enterprise IT, network planning and rollout, as well as the associated operational functions, both central and regional.

One year ago, Vodafone D2 identified an emerging organizational issue that—if left unattended—could ultimately have affected its capacity for growth. The problem is common in the rest of the mobile industry, but was made all the more pressing for Vodafone D2 because of the size and scale of its business. The issue needed to be resolved quickly to avoid affecting Vodafone D2’s strong forward momentum and future growth.

To a large extent, the problem was a result of Vodafone D2’s highly successful growth strategy. A combination of strong organic and acquisitive expansion had resulted in a sustained period of “hyper-growth” during which organizational challenges were often managed by adding resources and separate organizational units, rather than engaging in a more fundamental redesign. As the CTO organization grew over time, its structure gradually moved out of an optimal alignment with its core processes and customers’ needs.

Helmut Hoffmann, Vodafone D2’s CTO, quickly identified that this organization was not optimized for the opportunities and challenges ahead. Key considerations included the fact that the CTO organization had developed a strongly vertical structure involving 18 direct reports to the CTO, each focused on specific functions for particular technology layers or geographies. The existing structure was also not optimized for the rapid convergence between network and IT technologies, and the resulting need to manage projects and initiatives across all technology layers and assign clear end-to-end responsibilities. These issues were compounded by increasing market saturation and rising competition, which were intensifying the cost and time-to-market pressures facing the CTO area.

Vodafone D2 teamed with Accenture to plan and implement a comprehensive transformation program to redefine the core organizational units, processes and governance structure of the CTO area.

Accenture was selected to team with Vodafone D2 because of its deep understanding of the mobile industry, its track-record in assisting other Vodafone operating units throughout the world on major and complex transformation projects and its technology pedigree in collaborating with companies to help them become high-performance businesses.

Under the highly structured approach chosen for the program, the most important initiatives for the CTO area were prioritized and then implemented through four main projects. These were:

• Restructuring and streamlining of Service and IT Development
  
  
• Improving Governance and management of the regional branches
  
  
• Consolidating Network planning and design functions
  
  
• Restructuring of IT operations

These four discrete projects were embedded in an overall program management organization that handled central communication and change management, as well as managing the coordination of the various parallel projects. In each case, Accenture helped to drive the projects and brought in its cross-industry experience and best practice in areas such as IT transformation and large reorganization projects. Accenture was involved in all the project phases from conceptual design and mobilization through design and implementation, as well as supporting the stabilization phase after the organization’s launch.

The restructuring of the Service and IT Development project began with a seven-week conceptual study. Vodafone D2 and Accenture used the results of this conceptual phase to design and implement a streamlined, customer-oriented and clearly focused development organization. Even though the complexity and degree of change were considerable and affected a large number of people, the project was launched in just five months.

To improve Governance and management of the regional branches, Vodafone D2 and Accenture started by examining various potential organizational structures for the regional branches and for the governance model between headquarters and regions. This enabled the joint team to develop a new governance model, quantify the potential cost savings, define the necessary organizational changes and design and plan the implementation. This project was implemented within four months.

The consolidation of the Network planning and design functions began with a short conceptual phase during which Vodafone D2 and Accenture developed a holistic model for integrating the different network functions. Using this model, the joint team designed and implemented a new network organization that features clear accountabilities for all core processes (such as network planning and network design) across all network layers including core, access, radio and construction aspects. Additional key elements of the new organization are centralized tool development and strengthened project management capabilities. Design, implementation and launch of this unit took only four months.

The definition and implementation of the target IT operations function involved a four-month project. After an in-depth ”as-is” assessment of the current practices and performance indicators, the joint team defined the guiding principles and requirements for the target organization. The major inputs for this definition were Vodafone D2’s previous experience and a collection of Accenture’s unique best practices for high-performing IT organizations around the world. The guiding principles and requirements then drove the design of a new fully service-orientated IT operations department with a set of clearly-defined responsibilities for deployment, billing processes, CRM and MIS services, infrastructure services and project coordination.

Throughout the program, one of the key challenges for both Accenture and Vodafone D2 was the tight timeframe within which it needed to be carried out. The entire program, from very first concept phase to stabilization of the new organization, including all four projects, was completed in less than 10 months. CTO Helmut Hoffman was well aware of this challenge: “The Accenture team’s great support was key to helping us achieve our aggressive goal: to very rapidly realign the technical organization to prepare it for the future.”

Vodafone D2 now has a CTO organization that represents a step-change from the previous structure. The number of CTO direct reports has been reduced from 18 to five—a result of introducing clear accountabilities for the major functions such as development, operations and network infrastructure expansion. The new organization provides clearly-defined internal customer channels with end-to-end responsibility across all technologies and processes.

This new CTO structure is more cost-efficient, with streamlined and synergetic processes helping it to achieve shortened time-to-market cycles for development of new services and IT solutions. This greater efficiency is underpinned by increased focus and control in areas such as budget management, strategy and project management.

With Accenture’s help, Vodafone D2 transformed its CTO area into a streamlined and future-proof organization aligned with its business needs and operational goals. CTO Helmut Hoffman illustrates this by saying: "Together with Accenture we have built an efficient and result oriented organization that allows us to manage our services across all technology layers and is fully focused on our internal and external customers. This new organization prepares us for the future and enables us to reduce time-to-market and cost whilst further increasing transparency, quality and customer satisfaction."

The business benefits of the new CTO organization are now beginning to flow to Vodafone D2—and these will increase still further over time, thanks to the increased capacity for sustainable growth and greater agility resulting from the CTO restructuring undertaken with the assistance of Accenture. As Helmut Hoffman goes on to say, "Accenture has very effectively joined forces with my leadership team to embark on this transformation journey and supported us from the initial organizational assessment until after the successful launch of the new structure. Together with Accenture we have built an organization that prepares us for the opportunities and challenges ahead".

The key to the success of this new organization lies in the clear definition and communication of roles, responsibilities and accountabilities to everyone affected. As both Vodafone D2 and Accenture know, technology is a critical enabler—but it is people and organizational structures that set the context in which it can deliver high-performance business benefits. Thanks to Accenture’s support in this major transformation initiative, Vodafone D2 is now getting the best from its CTO people and its technology. As Helmut Hoffman says, “Accenture's support in the areas of organization and process design, communications and training as well as providing industry best practices were key elements in transforming our technical organization towards new levels of high performance in a constantly changing business environment."