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Procurement in Practice: BT Sourced — Redefining procurement and the CPO for the 21st century

07/20/2021 By

New, standalone procurement company, BT Sourced, was set up in early 2021 as a separate entity to manage BT’s entire multi-billion-pound global sourcing operation.

BT, one of the world’s leading communications companies, serves customers in over 180 countries. It employs 99,700 full-time-equivalent colleagues in 44 countries across the globe, with 80,400 of these based in the UK where it is one of the country’s largest employers.

The organization’s vision was to redefine procurement from top to bottom; to build a more digital, and more sustainable, business model to drive continuous transformation and create value for everyone — customers, suppliers, partners, colleagues and communities. Using the latest advancements in blockchain, AI, robotics and machine learning, BT Sourced aims to use partner/supplier collaboration and technology to develop its next innovations.

It is no coincidence therefore that BT chose Dublin, Ireland, to establish BT Sourced: “The tech cluster of Dublin is the perfect place to innovate at speed and scale,” said Cyril Pourrat, Head of BT Sourced and BT Group CPO.

His story is an unlikely one in the world of procurement, but one which may well set a future path for other CPOs as the role of procurement grows and redefines itself in large organizations.

Pourrat has control of about €14.8bn (£13bn) spend, a large part of which is on fiber cables and infrastructure to help them roll out full fiber, 4G and 5G services across the UK. As head of this organization, he is therefore performing duties similar to that of a CEO, steering BT Sourced toward the future while leveraging data and automation to increase productivity, uncover new efficiencies and drive collaboration across a complex global footprint.

At a recent SIG Procurement Technology Summit session, he talked to Nikesh Parekh, CEO of Suplari, a BT Sourced partner, about how he is carving out an organization to transform procurement from a very traditional operation at BT to a nimble organization that can manage and respond quickly to major changes in the market. Part of that is using AI in spend analytics to make data useful and accessible to everyone in the company.

“It’s important to keep up to date with the latest technology if you want to move along in your career — that means embracing innovation and not be risk-averse,” he says.

This is the kind of requisite thinking that moves procurement along to where it needs to be for the 21st century. But why the decision to create a whole new organization to do this?

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Rethinking procurement at BT

“Our CEO is innovative and believes in getting transformation done — so success is more guaranteed when we are supported from the top,” Pourrat explains. “BT is going through a root-and-branch process to modernize and simplify the way it does business. One of the key aims of setting up BT Sourced as a standalone procurement company is to help create efficiencies and savings as part of this modernization program to save £2bn in costs by 2025. It’s a tried-and-tested model in our industry, and in many others.

“We also want to use it as an opportunity to help us transform procurement at BT, and take it into a new era — one that drives continuous transformation and creates value for everyone. We’re making huge investments into the latest blockchain, AI, robotics and machine learning tech and rethinking every aspect of our procurement model to make it more simple, automated and standardized.”

BT is a huge firm, but it believes in open, shared data where everyone will drive innovative thinking.

“In a big organization with a big number of employees,” says Pourrat, “people can be slow to respond or adapt to change — things can take time.” So BT uses an open platform where innovative ideas can be shared among the whole ecosystem to further drive transformation everywhere, not just in procurement.

And the sharing of data and innovation doesn’t stop there. Part of the BT Sourced longer-term strategy is to form partnerships with other carriers that not only leverage combined scale, but provide a transformational platform for joint innovation, strategic collaboration and partner-driven growth.

Benefits of an independent procurement organization

Spinning off the procurement organization into something independent means you can change the way you source and spend, and Pourrat has already seen some positive results from digital transformation in a number of areas.

“Our dynamic risk management platform has already caught a number of issues that would have taken much longer to come to light; our accounts teams can now directly see third-party spend supporting their accounts, and knowledge management and category strategies are now fully digitized and driving collaboration across the business. In Negotiation Analytics, we’ve developed scripts that will read and summarize hugely complex tender pricing responses in under one minute. We’ve also developed NLP scripts that will read and summarize our key supplier financial results.”

Information at their fingertips

The “digital” starting point was to have easy access to everything, literally at their fingertips, which included having knowledge like supplier information and even negotiation available on their phones.

“I wanted my category managers to understand what’s going on inside our customer and supplier organizations, so embracing technology that can give access to that knowledge quickly was important,” Pourrat says. “We’ve prepared some NLP scripts that ingest, read and summarize our key suppliers’ financial results each quarter, providing almost immediate insight to buyers responsible for our key vendors as well as measuring the polarity of those releases.”

These insights mean the right decisions can be made quickly and at the right time, and importantly, can be shared with the business. As we’ve witnessed in times of turbulent supply chains, nimble decision making is crucial for supply assurance.

Spend analytics as a digital priority

Being agile enough to react to market conditions clearly benefits the whole organization, so visibility of the “with whom, when, where and why” of spend is crucial. Getting spend analytics right is one of the first priorities for digital transformation, according to Pourrat.

“Spend is one of the cornerstones of procurement data and was therefore a top priority given the incredible complexity of the spend in a multinational, multidimensional company that has evolved over the years. We have multiple ordering channels and invoicing routes, so consolidating spend and driving meaningful insights is critical.

“Our provider does all the basics of taking our raw data and normalizing it (categories and supplier names), the machine learning keeps it updated and the AI gives us some fantastic actionable insights around the tail spend optimization, retrospective POs and more. What has proven incredibly useful recently is the ability to re-draw the BT structure and have this flashed back through all the historical data we hold in our system so that we can have our historical spend data look like it was spent against today’s organizational design.”

An exciting time for tech capability …

So what does a procurement tech landscape look like for BT, and what are its most important aspects?

“Our ecosystem starts with process and solving process pain points with incredible SAAS cloud solutions. We can then deep dive into specific areas such as spend or risk in the appropriate tool, but also get live visibility of basic information shared in from other tools. We’re now working toward overlaying all of this in an AI-driven orchestration layer that will use NLP for front-door functionality and contain our overall workflows and governance. The really exciting thing is how we can use it to learn what we are doing over time and then automate the repeatable and suggest the next best action, not just for sourcing, but all other types of procurement activity.”

… but overall people are key

As is a recurring theme in our Procurement in Practice interview series, CPOs recognize that people are at the heart of any successful procurement transformation.

“We’re really excited about building a diverse team of brilliant people in Dublin from a variety of background and specialisms,” says Pourrat. “Some will come directly from BT, bringing a wealth of knowledge of our stakeholders and suppliers; others will be new faces from outside of BT, offering new capabilities and perspectives. Together we’ll partner with our global procurement teams to deliver procurement for the future. A critical aspect of this will be the new capabilities we’ll be building in our company, particularly in the area of Negotiation Analysts. Here we’ll be putting in place a team of data scientists, who, utilizing the latest technology and AI, will build advanced data-driven insights and trend analysis, to drive the greatest value for our complex negotiations. This new capability is the future of procurement and we’re excited to be leading the way.”

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CPO - Chief Procurement Officer