Step-Change Productivity - Analyst & Journalist Briefing 2014
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This document outlines Tele2's plan to significantly improve productivity over 4 years through their "Challenger Program". The program aims to simplify processes, increase discipline, consolidate technology, and transform support functions. Examples highlighted include consolidating product development, reducing marketing spend, data center consolidation, and increasing the use of shared operations. The program expects to realize annual productivity improvements of 1 billion SEK by 2018 through multi-year investments and restructuring. Tele2 will provide updates on progress at quarterly reporting until the benefits are fully realized.
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Step-Change Productivity - Analyst & Journalist Briefing 2014
- 1. STEP-CHANGE PRODUCTIVITY Allison Kirkby, Group CFO
- 2. How we win FocusedTechnologyChoices Value Champion Step-Change Productivity Winning People & Culture Key focus areas Discipline Consolidate Transform Simplify 1
- 3. Challenger with a Track record 2
- 4. The challenge is what makes it exciting. You don't want to do anything that's too easy or that you know that you can pull off, otherwise it's really not worth doing Our legacy: Always the challenger with cost consciousness in our DNA “ “ One of our basic guidelines in the office is that we are short of time and money. Hence, we are always in a hurry and use our cash extremely smart. At least in the office “ “ 3
- 5. Our challenger position requires cost leadership and maintained high quality 4
- 6. Why? Total Cost Time Continue to offer our customers what they need, for less Desire to reassess our cost structure Opportunity to make a step-change in our productivity 5
- 7. Existing structural advantages Network joint ventures IT Shared Service Center in Riga Group NOC consolidation in Riga e.g. Tele2 saving 40% (Opexplus Capex) e.g. Estimated labor arbitrage 40% Joint Ventures Labor Arbitrage 6 Illustrative examples.
- 8. Enablers to further structural advantages e.g. Building a 800/900 MHz network is typically 5x more cost efficient1)compared to 2.6 GHz 1) Weighted coverage and capacity. Source: Tele2 and Nokia. Illustrative examples. Focus on LTE Customer data World class systems e.g. Benefit from exiting old data warehouse system 20 MSEK e.g. RTR increase September 2014 YoY3ximplying revenues of 14 MSEK LTE Real Time Rating Business Intelligence 7
- 9. The Challenger ProgramWe will become #1 in effectiveness and efficiency Simplify Discipline Consolidate Transform 8
- 10. We will deliver simplification Product development consolidation Retiring legacy Product portfolio simplification % of shared product lifecycle activities1) <10% >75% High 1) Indicative examples. Benchmark: Accenture, August 2014. Tele2: Low Product Development Simplify Discipline Consolidate Transform 9
- 11. We will drivediscipline in everything we do Best practice sharing Leverage online Analytics Total marketing spend as % of revenue1) 7% 3% ~5% >50% Independent Structured best practice sharing Online share as % of sales1) Group-wide knowledge sharing1) Marketing Spend Online Sales Knowledge Sharing Best performer Worst performer Best performer Worst performer Simplify Discipline Consolidate Transform 10 1) Indicative examples. Benchmark: Accenture, August 2014. Tele2:
- 12. We will increaseconsolidationin technology Rationalization Service delivery Data center consolidation e.g. Estimated labor arbitrage 40% IT cost as % of Opex1) 5% 3% 2-3 Number of core data centers1) IT Costs Data Centers Labor Arbitrage Best performer Worst performer Best performer Worst performer Simplify Discipline Consolidate Transform * Excluding Kazakhstan 1) Indicative examples. Benchmark: Accenture, August 2014. Tele2: 11
- 13. We willtransform our support functions Leverage scale & skill Procurement scope increase Self service adoption increase % of FTE in shared operations1) 0% 70% Share of total sourcing spend managed globally1) 0% 90% >50% Online self service share1) Shared Operations Online Self Service Sourcing Spend Best performer Worst performer Best performer Worst performer High Low Simplify Discipline Consolidate Transform 12 1) Indicative examples. Benchmark: Accenture, August 2014. Tele2:
- 14. TodayTarget A multi-year investment program that will realize significant benefits * Indicative program benefits and costs. Analysis phase will identify and validate total Opex, Capexand Revenue benefits. Baseline: Forecast FY 2014 Productivity improvement: 1 BSEK (5%) Target 2015201620172018 2015 2017 2018 2016 Ramp-up of indicativecosts and benefits over 4 years Benefits Restructuring costs / investments 13
- 15. We are analyzing our ideas and estimate 3-6 months before commencing execution 2015 2016 TODAY 2014 We will come back with more details at Q2 reporting on 21 July 2015, and will report on progress quarterly until full benefits have been realized 21/7 2017 2018 Investment phase Benefits phase 14
- 16. Summary Discipline Consolidate Transform Simplify 15
- 17. Q&A
- 18. Agenda 11.00-11.25 Way2Win MatsGranryd Lars Torstensson 11.25-11.50 Focused Technology Choices Joachim Horn 11.50-12.15 Value Champion Anders Olsson 12.15-12.40 Step-Change Productivity Allison Kirkby 12.40-12.50 Q&A 12.50-13.30 Lunch Atrium 13.30-14.00 Sweden Thomas Ekman 14.00-14.15 Baltics Niklas Sonkin 14.15-14.45 The Netherlands Jeff Dodds 14.45-14.55 Q&A 14.55-15.00 Summary Mats Granryd Allison Kirkby