Unilever: New BT global outsourcing agreement helps Unilever achieve a lower cost base and sharper competitive edge

BT helps FMCG giant focus on innovation and use the power of the network to improve competitive advantage

When BT and Unilever first engaged in a global outsourcing agreement in 2002 it was one of the biggest of its kind

Much has been achieved since then, and the relationship has come a long way. Now, under a new contract signed in 2010, Damian Zannelli says that the focus is firmly on innovation. For example, the two companies are looking for ways in which Unilever can exploit new technology to better manage its supply chain.

Meanwhile, under the new agreement, BT has committed to further reduce year-on-year Unilever running costs.

The lifeblood of our organisation is information. BT service is critical because without the network the data stops flowing and our products don’t reach the shelves.”
- Damian Zannelli, IT Director – Benelux, France, Spain, Unilever

This video features Damian Zannelli, IT Director Benelux, France and Spain at Unilever, and Alan Crowther of BT as they describe the global network outsourcing contract extension signed in 2010, the dynamics surrounding that deal, and the two companies’ recipe for success.

Under a global outsourcing agreement, BT and Unilever have been working together since 2002. Damian Zannelli, IT Director – Benelux, France and Spain at Unilever, recalls: “The signature of that contract was an important milestone for both organisations. BT was keen to go into that challenge.”

However, it became apparent that there were inefficiencies that did no favours to either party. For example, as services matured at different rates around the world, governance and reporting were driven by regional rather than global preferences. This fragmentation made it difficult for global key performance indicators to be measured, and to compare service consistency between the regions.

In other respects, both parties were satisfied with the relationship and there was a joint desire to address the challenges. An opportunity arose in 2010, when negotiations took place to extend the contract until the end of 2013. The agreement covers full end-to-end management of voice, data, and security services across around 1,000 sites in more than 100 countries. The BT service architecture for Unilever uses a follow-the-sun model with service centres in San Paolo in Brazil, Pune in India, and Sevenoaks in the UK acting together as a seamless entity.

That contract renewal gave BT and Unilever the chance to review processes to achieve greater flexibility. That would allow BT and Unilever to rapidly identify and exploit changes in technology, while constantly improving the agreement in terms of competitiveness and service levels.

Improvements include clearer and more relevant service level agreements closely tied to users’ needs and expectations. BT further demonstrated its commitment to Unilever by bringing in a new key account team and service personnel.

The BT vision for its relationship with Unilever is to become acknowledged as a long-term partner integral to the company’s business. As part of this, the BT account team is constantly looking for ways to improve competitive edge for Unilever, for example by finding ways to use the power of the network to better manage the supply chain.

Damian Zannelli says: “With the new contract we have the right framework. So now is the time for us to focus on innovation and take it from the network services team – that’s Unilever and BT – down to the business functions.”

That quest has seen a drive to invest in new capabilities. The new contract allows for more standardisation than was previously the case, creating better conditions for cost efficiency. An example is an initiative to enable more agile working through Unilever-wide standard processes such as single sign-on. That enables the best use to be made of the most appropriate workplace locations for people to do their jobs.

The amendment to the contract effectively modernises the agreement. It gives more flexibility for Unilever, while containing a number of commitments for BT. These in turn allow BT to deliver services more consistently and perform to an even higher standard. “One of the most important triggers for us to re-sign this engagement with BT was savings,” says Damian Zannelli. “We have agreed a reduction in our running costs of 10 per cent in 2010 and 15 per cent in 2011.”

New technologies, economies of scale, and better deals with third party service providers all have their parts to play in that equation. However, contract-driven initiatives also contribute significantly, such as standardising governance processes across the globe. That makes BT contract management more cost effective by, for example, providing the same set of management information reports from each region. It also makes it easier for Unilever to measure the performance of BT.

Damian Zannelli concludes: “What really drives me, my organisation, and ultimately our engagement is the value to the business that we generate. What makes the difference is the people that we have on the Unilever side, and the people that we have on the BT side, actually making it happen.”

• Full end-to-end management of voice, data, and security services across around 1,000 sites in more than 100 countries