© British Telecommunications plc 1 Issue 4 – 22/09/2011 Production & Operational Planning Richard Tunks, Programme Director Chetna Shah, People Lead Matt Rogers, IR/ER Lead

© British Telecommunications plc 2 Issue 4 – 22/09/2011 Delivering BT’s growth Operate’s vision is to be: A trusted partner delivering exceptional and competitive service to our customers be simpler by having fewer things to run which are simpler to operate be lean with processes that help and don’t hinder be clear about what I do and feel supported and able to do it well be smart by knowing our business inside out… and outside in We will… BT Operate’s strategy Operate 2014 A1 Information Driven Business A2 Optimise financial planning A 3 Production & operational planning B1 Lean Service L2C B2 Lean ServiceT2R C1 C2M uplift C2 Network & IT capacity managment C3 Rationalise products C4 Rationalise applications C7 Purchasing excellence & optimise suppliers C5 Rationalise networks C6 Rationalise data centres & locations D1 Role clarity & accountability D2 Leadership impact and employee involvement D3 Location strategy AB C D

© British Telecommunications plc 3 Issue 4 – 22/09/2011 Single, end to end approach to joining up strategic planning with what happens on the ground Strategic planning 1-5 years Operational planning months Tactical planning 1-6 weeks Execution MFU aspirations Technology evolution Operate transformation BTO 1-5 year plan, resources and budgets Monthly planning Volume + demand forecasts Supply from BTO Managing volatility Weekly planning Task allocation Result Improved visibility of demand Measure/control/report in a consistent way Financial relationship between Operate/MFUs re-set Greater collaboration (culture change) Aim to implement planning process right across BT – into Openreach, and at strategic level with BT for Capacity Planning

© British Telecommunications plc 4 Issue 4 – 22/09/2011 Operational Planning Process Production Planning is a compromise of Productivity, Cost and Customer Experience Operational Performance Productivity Customer Experience Cost

© British Telecommunications plc 5 Issue 4 – 22/09/2011 Customers Better more reliable service experience Better Value products / services People Improved Work Life balance Scope for greater breadth / variety of work More efficient Future Planning MFUs Lower total cost of supplying products/services Shorter cycle time Better RFT New products to market faster BTO Improved Resource Planning Operational efficiency (revenue up, cost down) Fewer surprises Agility Improved skills and L&D planning Benefits of Implementing Production Planning

© British Telecommunications plc 6 Issue 4 – 22/09/2011 Delivery Units in Scope The following units across BTO are in scope for Production Planning: Service Delivery Service Infrastructure and Service Management Strategy and Service Introduction Security

© British Telecommunications plc 7 Issue 4 – 22/09/2011 What do we need to do to make it happen in BTO? 7 Capacity Management Production Planning Stages Current StateComplexCoordinatedControlledCompliant Continuous Improvement Non Standard Inconsistent Un-trusted Local No Integration Manual Adhoc Siloed Sub-optimal Reactive Standardised approach to SPM Common architecture, tools & methods Automated SPM BPMS Implemented Cross BTO alignment of demand & resource models Optimal operations Proactive processes Adherence to standard models and outputs Common working practices Dynamic Cost per Process Review Recalibrate Patchy implent No common approach, standards or practices No synthetics No management of Demand or Capacity No linkage between Business Units Basic BPM with Common terminology SLA/OLA’s in place Skills & Capabilities Standard Roles No Forecasts v.s. Actual review e2e visibility of resource Clear Synthetics (Elapsed / Dwell Time etc) Intra Process Control Inter Process Control Near Real Time Actuals Process & Performance aligned to strategy Non-Standard “stuff” minimised – = 90% of actual work - + rigorous enforcement. Managed variation Real Time Actuals Agility Example Outcomes Characteristics As Is

© British Telecommunications plc 8 Issue 4 – 22/09/2011 Our Progress CurrentComplexCo-ordinatedControlledCompliantContinuous Improvement Create BTO MTP Q2 11/12Q3 11/12Q4 11/12Q1 12/13Q2 12/13Q3 12/13Q4 12/13Q1 13/14Q2 13/14Q3 13/14Q4 13/14Q1 14/15 Document Strategic Planning Process. BTO 2012/13 Plan Agreed. QRF3 Review Automation of MTP Create 12/13 MTP Olympics Embargo Document Operational Planning Process. Create Operational Planning – rollout & embed in SD Create Operational Planning – rollout & embed in SI / SM Trial in SM Ops Create Operational Planning – rollout & embed in Security Create Operational Planning – rollout & embed in SSI BTID – Production Planning Systems Roadmap Seed-corn Funding Business Case. Programme Bus Case + Q3 Development & Seed-corn R1 – Operational Planning Automation BTID – Initial Systems Development, Test & Rel Interim Release BTID – On-going Development Implement & Embed new process – recal in SD Create Tactical Planning Process in SD – rollout and embed Implement & Embed new process – recal in SI/SM Implement & Embed new process – recal n Sec & SSI Tactical Planning Process in SI/SM – rollout and embed Tactical Planning Process in Sec & SSI rollout and embed

© British Telecommunications plc 9 Issue 4 – 22/09/2011 Contact Strategy The implementation will occur through each Operate Delivery unit and future communications and updates will be undertaken either locally or centrally through the programme. We’d like you to be involved: We would like to get your feedback regularly We will share all communications in advance We will update you on our progress We’d like to consult you if we come across issues We will engage with you regionally where required

© British Telecommunications plc 10 Issue 4 – 22/09/2011 Production Planning Summary Strategic Supply Planning 12 – 36 month forward view of supply requirements Operational Supply Planning 1 – 12 month forward view of supply requirements Primary focus is next months 1 – 3 inclusive with secondary focus being months 4 – 6 inclusive Requirements will predominantly originate from the Unconstrained Volume Demand Forecast The forward view of supply requirements must be aligned with the financial planning cycle Key benefits Greater detail on which to make informed resource planning decisions Data allows more effective use of the variance process to agree growth / shrinkage