Vodafone Group has focused on building competitive advantages to improve its top line through IT initiatives. It has shown agility in adapting new technologies to create innovative services like Vodafone 360, Vodafone Vorteil bundles, and cloud computing services faster than competitors. These services improve the customer experience and build loyalty. Vodafone has also optimized its network capacity for differentiated services.

1. Running Head: IT Management Strategies in Vodafone Group
IT Management Strategies in Vodafone Group
Toru Sekiguchi
April 4th, 2010
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2. Table of Contents
Title Page………………………………………………………………………………page i
Table of Contents……………………………………………………………………...page ii
Abstract…………………………………………………………………………….......page iii
I. Introduction………………………………………………………………………..page 1
II. Building a learning organization and a professional intellect…………………..page 2
III. Taking advantage of Customer Relationship Management tools……………....page 3
IV. Building competitive advantages……………………………………...……….....page 4
4.1 Top Line Improvements………………………………………...……………....page 4
4.1.1 Agility to adapt the advanced technologies……………........…………….page 4
4.1.2 Optimizing entire value chains and redefining industry …….……………page 6
4.1.3 Group Technology…………………………………………….…………..page 7
4.2 Bottom Line Improvements……………………………………………………..page 8
V. Using IT initiatives to transform the operator…………………………………...page 9
5.1 One Vodafone …………………………………………………………………..page 9
5.2 Network Sharing with Orange…………………………………………………..page10
5.3 IT Outsourcing to IBM and EDS………………………………………………..page 10
5.4 Centralized Supply Chain Management………………………………………...page 11
5.5 Data Center Consolidation……………………………………………………....page 12
VI. Conclusions…………………………………………………………………………page 14
VII. Bibliography…………………….……………………………………………...page 15
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3. Abstract
Mobile operators are gaining the first mover advantage that enables them successfully to
improve top line and build customer loyalty when they create innovative and differentiated
products and services and launch them quicker than other competitors. In a fierce competitive
mobile telecommunications market, gaining and maintaining cost and operational efficiency
relatively has a great impact on bottom line improvements. These operators can capitalize on IT
capabilities to gain and maintain competitive advantages and improve both top line and bottom
line to achieve their strategies and objectives.
Vodafone Group is the world‟s largest mobile operator to provide a total of 333 million
subscribers with its products and services globally. The Group has a better understanding of the
strategic values of IT as a source of competitive advantages to continuously improve both top
line and bottom line in order to achieve its organizational strategies.
To improve top line, Vodafone Group has continuously developed and launched new
differentiated products and services beyond traditional voice and simple data services to improve
customer experience and build customer loyalty while adapting the advanced technologies faster
than its competitors, optimizing entire value chains and redefining industry, and focusing on the
Group Technology activities. To improve bottom line, Vodafone Group has implemented its
strategic initiative, „One Vodafone‟ program, which transforms 16 operating companies into a
united operation to achieve streamlined cost effective and efficient organization. Vodafone
Group has embedded IT sharing, outsourcing, and centralization and consolidation strategies in
order to achieve the objectives of One Vodafone program. Radio access network are shared with
Orange, IT application development and maintenance are outsourced to IBM and EDS, and
supply chain management function and data centers are centralized and consolidated.
Vodafone Group has developed group-wide strategy that is associated with its better
understanding of the importance of the customer experience to its business success. The Group
standardized on Siebel CRM platforms globally to gain a 360 degree view of customers, and
measure and manage customer satisfaction, customer loyalty, revenue assurance, revenue growth
and profitability. Vodafone Group have been committed to helping all employees reach their full
potential through ongoing training and development while Vodafone Group has embraced
diverse workforce and created a leaner and agile structure with clear accountabilities. Vodafone
Group capitalizes on IT capabilities to enable all employees to have access to a Learning
Academy to deliver the one-stop shop for all learning and development solutions.
IT definitely plays a decisive role in Vodafone Group as a critical enabler to gain and
maintain competitive advantages and to perform its business operations more efficiently and
effectively. Understanding the values of IT is essential for people in Vodafone Group in order to
successfully achieve organizational strategies and objectives.
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4. I. Introduction
The mobile telecommunications industry is one of the fastest growing sectors around the
globe. Mobile operators are still able to gain the first mover advantage that enables them
successfully to improve top line and build customer loyalty when they create innovative and
differentiated products and services and launch them quicker than other competitors. In a fierce
competitive mobile telecommunications market, gaining and maintaining cost and operational
efficiency relatively has a great impact on bottom line improvements. These operators can
capitalize on IT capabilities to gain and maintain competitive advantages and improve both top
line and bottom line in order to achieve their strategies and objectives.
Vodafone Group Plc, which was established in 1982, is the world‟s largest mobile operator
that manages ultra large-scale mobile networks in 25 countries and has a presence through
partnerships in another 39 countries. “Based on the registered customers of mobile
telecommunications ventures in which it had ownership interests at that date, the Group had 333
million customers” (Vodafone, 2010). Vodafone Group is one of the most influential companies
in mobile telecommunications industry and now attempting to move into the fixed voice and
broadband markets. The operator has a better understanding of the strategic values of
information technology (IT) as a source of competitive advantages and has capitalized on IT
capabilities to expand its marketplace more globally, and create and launch innovative and
differentiated products and services like Vodafone 360 and Cloud Services more rapidly than
other mobile operators in order to improve top line. Vodafone Group strategically shares with or
outsources some business activities to third partied, and centralize and consolidate other
activities, which each group company had previously managed in each country, to Vodafone
Group, in order to significantly gain and maintain cost and operational efficiency in order to
improve bottom line.
IT definitely plays a decisive role in Vodafone Group. The objective of this paper is to
analyze the IT management strategies, tools, initiatives and transitional planning in Vodafone
Group to ensure that the operator capitalizes on IT capabilities effectively and efficiently to
achieve their organizational strategies and objectives.
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5. II. Building a learning organization and a professional intellect
Vodafone Group has embraced diverse workforce and offers equal opportunities for all
aspects of employment and advancement, regardless of race, nationality, sex, age, marital status,
disability, religious or political belief, to understand expectations of its diverse customers around
the globe and have required skills and competences to create and launch the innovative and
differentiated products and services that Vodafone Group meets its customers‟ requirements.
Vodafone Group created a leaner and agile structure with clear accountabilities in 2009 to
accommodate rapid growth. Three regions, including Europe, Africa and Central Europe, and
Asia Pacific and Middle East, were created and each regional CEO was appointed. Along with
the group-wide organizational restructuring efforts, several centralization initiatives have been
accelerated, including supply chain, product development, IT and network programs, and
terminal procurement. As the result, approximately 1,900 jobs were eliminated but the overall
number of employees grew 9% because of rapid growth in emerging markers and business
acquisitions.
Although organizational structure has been continuously improved in response to market
environmental changes, Vodafone Group has been committed to helping all employees reach
their full potential through ongoing training and development. “In the 2009 financial year,
Vodafone provided an aggregate of 230,000 days of training, an average of three days per
employee”, and “this training program was extended to all employees via an online interactive
course that has been translated into 11 languages and rolled out to 18 countries” (Vodafone, 2009,
p.18).
Vodafone Group capitalizes on IT capabilities to support its one-stop shop for all learning
and development solutions that enable all employees to have access to a self-service
development portal and Learning Academy on its intranet to develop required skills and
competences. The self-service portal is fully integrated for reporting and analysis purposes.
Online „Source a Course‟ application incorporates a wide range of training options across
multiple categories that all employees are able to individually select, and also provides them with
opportunities to source a course if their specific training requirements are not on the system.
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6. III. Taking advantage of Customer Relationship Management tools
Vodafone Group has developed the group-wide strategy that is associated with its better
understanding of the importance of the customer experience to its business success. Delivering
value-added products and services that can meet individual customer needs and widen the scope
of its relationship with its customers are essential to reshape its competitive environment.
Vodafone Group has standardized on Siebel CRM platforms across three geographies to
collect, analyze and share customer information across multi-channels, including customer
service agents, sales and marketing teams, to gain a 360 degree view of customers, and measure
and manage customer satisfaction, customer loyalty, revenue assurance, revenue growth and
profitability. Employees in Vodafone Group have access to a centralized repository for customer
information in the systems. Siebel CRM systems have helped Vodafone Group optimize up-
selling and cross-selling opportunities to grow revenues more quickly, predictably and profitably,
and also significantly reduce the time to create and execute precisely targeted customer retention
and acquisition while improving its ability to measure marketing return on investment. The
systems also encourage Vodafone Group to improve productivity of customer care organizations
by automating previous complicated workflow and reducing the time it takes to respond to
answers, and Vodafone Group has gained significant cost savings.
The customer experience is assessed by Vodafone Group through customer surveys, repairs
and returns, mystery shops and written complaints but its challenges in existing Siebel CRM
systems is to completely implement revenue assurance, churn and win-back functions from the
viewpoint of a customer-centric dimension.
Revenue Assurance (RA) is a vital requirement in any telecommunications operators to
reduce and prevent revenue leakage that is identified as a uncontrolled costs derived from
“network provisioning, CDR and mediation errors, billing and interconnect inconsistencies, loss
of data and corrupted files, fragmented support systems, incoherent databases, and manual or ill
defined business processes” (TeleManagement Forum, 2009, p. 5). Donaldson and O‟Toole
(2007) argued that “Telco may be losing 1-30% of revenues owing to leakage”, and “a failure to
take into account the CRM dimension of RA is very costly for the firm” (p.144). RA is typically
embraced in the concept of Customer Relationship Management (CRM) but the billing
department in Vodafone Group has been responsible for RA activities and a customer-centric
dimension to RA is missing in the CRM systems. Churn management is also another vital
requirement in any operators in line with each operator‟s specific customer retention strategies,
and promotions and campaigns. The difficulty in implementing churn management is that key
performance indicators of predictive churn are little available in a relationship context and as a
part of the CRM systems. Finally, win-back is “the effort an organization expands to win back
(or recapture) customer‟s goodwill once it has been lost due to service failure” (Donaldson and
O‟Toole, 2007, p.146). Vodafone Group has not implemented it from the standpoint of a
customer-centric dimension yet.
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7. IV. Building competitive advantages
4.1 Top Line Improvements
Vodafone Group has definitely had better understanding of the strategic values of IT to gain
and maintain competitive advantages from the viewpoint of both top line and bottom line
improvements. To improve top line, general telecommunication operators consider IT as sources
of innovative and differentiated products and services that they create and launch globally in a
timely manner. Vodafone Group has not used the cheaper price than other competitors to attract
new customers and retain existing customers to become the largest or the second largest mobile
operator in the most markets the Group has ever entered but it has focused on creating and
launching new value-added services that entice new customers. Arun Sarin, the former CEO of
Vodafone Group stated (Hitt, Ireland and Hoskisson, 2008, p. 340).
We have rededicated ourselves to delighting our customers because we believe this is the
foundation for our continued success. We recognize that every customer interaction provides
another opportunity to win loyalty and that‟s why we continue to raise standards on the
quality of customer case in our call centers and our stores and the quality of our networks.
Key to delighting our customers is our ability to deliver superior voice and data services
according to differing customer needs.
The choice of right IT at right time is necessary to drive current and future returns and
intellectual capital that articulate and structure all the stakeholders‟ values, and Vodafone
Group‟s three key strategic IT initiatives have been sources of competitive advantages to
improve top line.
4.1.1 Agility to adapt the advanced technologies
Telecommunication operators‟ agility to adapt the advanced technologies has a great impact on
innovative and differentiated products and services, including the converged services of network
data, services data and customer data available to improve customer experience in response to
the changing customer needs and market environment. Saxtoft (2008) argued that “competitive
advantages in the future convergent communications industry will be based on the organizational
ability of communications service providers to utilize the specific mix of network data, services
data and customer data available to each of the players in the market” (p.71).
Vodafone‟s ability to adapt new IT continuously ensures that their customers are able to
“stay connected to the people and the information that are central to their lives – via voice, text,
instant messaging, e-mail, music, communities, news, and applications both social and work
related – whenever, wherever” (Read, 2009, p.12). Vodafone Group thus created Vodafone 360,
Vodafone Vorteil, and Cloud Computing services and the Group in turn can greatly improve
customer experience, and eventually gain and maintain its competitive advantages. Along with
increasing bandwidth demands and a data dominated traffic mix, the ability to optimize its
network capacity according to the differentiated products and services has been essential in
improving quality of services for these services.
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8. Vodafone launched „Vodafone 360‟, a suite of new Internet services for the mobile and PC
that gather all of customer‟s friends, communities, entertainment and personal favorites.
Vodafone 360 encompass a universal contacts address book „Vodafone People‟ that
automatically synchronize all contacts from a customer phone, Facebook, Windows Live
Messenger, and Google Talk, and an online content and data management tool. Vodafone 360
brought together many existing Vodafone mobile Internet initiatives under a common and
intuitive service umbrella. Vodafone 360 represents the new service standard to take everything
back in Vodafone and superimpose proprietary ownership over all service aspects while
dispelling the notion that mobile operators are unable to response to the full force of the
innovation that Apple iPhone brought to market. This is the first time a mobile operator has
created an experience which can compete against the iPhone standard of excellence and superior
user interface.
Vodafone is now attempting to move into the fixed voice and broadband markets and has
either acquired fixed Internet Service Providers in some countries or formed partnerships in the
other countries where acquisitions are not feasible or not cost efficient. “The previously pure
mobile operator is now following a total communications strategy which includes mobile
(cellular), broadband (fixed) and wireless; it has been offering combined services, with fixed,
mobile and broadband services under a single bill” (Mavrakis and Saddi, 2009, p. 42). Vodafone
Germany launched a new multi-service discount service, „Vodafone Vorteil‟, for customers who
purchase a bundle of fixed and mobile services in 2009. The service offered discounts at
maximum EUR 20 a month for various combination of service in Germany in response to market
environmental changes that loyalty discounts are coming to the fore as a key competitive
advantage in the recent economic recession in Germany. Vodafone Vorteil customers also
benefit from a 24 hour, door-to-door mobile phone replacement service and free 24-by-7
customer support hotline, and a 25% new handset discount.
Cloud Computing has become popular in the telecommunications industry all over the world.
It is “a large-scale distributed computing paradigm that is driven by economies of scale, in which
a pool of abstracted, virtualized, dynamically-scalable, managed computing power, storage,
platforms, and services are delivered on demand to external customers over the Internet”, and
“has become the hottest technology in IT” (Jaatun, 2009, p. 559). Vodafone Group announced a
strategic partnership with Decho Corporation to deliver a series of „Could Services‟ for both
enterprise and consumer markets. The first service to emerge across the Vodafone Group
footprint is the „Vodafone PC Backup‟ service that enables customers to save personal data from
the PC to a remotely hosted site. They are able to view and share the data from their account
through the web browser of their PC while reducing the need to transfer the data from one device
to others. None of Vodafone‟s key Tier 1 competitors has launched free PC backup and online
storage aggressively with consumer mobile broadband services and Vodafone Group is relatively
staking leadership in consumer Cloud Service provision. Emma (2009) argued that “A
Vodafone-branded PC backup service promises powerful value-added differentiation for the
operator‟s mobile and fixed broadband portfolio across its key European markers by year-end”
(p.1). Vodafone Group can continuously maintain its competitive advantages while launching a
series of Cloud Services faster than other competitors, in addition to existing PC backup and
online storage services.
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9. 4.1.2 Optimizing entire value chains and redefining industry
Optimizing entire value chains beyond Vodafone Group and its traditional suppliers, and
redefining industry are identified as sources of competitive advantages to create and launch
innovative and differentiated products and services. The telecommunications industry is
confronted with unprecedented challenges in breaking down traditional industry boundaries and
redefining industry in response to changing market environment while the Internet companies
such as Google, eBay and Yahoo have demonstrated business models that enable third parties to
develop new services by combining existing services to increase the value of the traditional and
original services. Service providers are no longer limited to the traditional voice and simple data
services but are comprised of content, application, and other service providers. To compete
against these new service providers, an effective service delivery framework is essential, to
deliver and maintain differentiated services beyond traditional boundaries, achieve time to
market, and conclude business agreements among all stakeholders.
Vodafone Group started implementing Service Delivery Platform (SDP) in 2002 that is “an
infrastructure for service delivery to be provided for technically enabling business to engage in
business transaction” (Filipe and Cordeiro, 2009, p. 21) to effectively deliver „Vodafone Live‟
service in a timely manner. Its multimedia portal was marketed extensively in the traditional
media. SDP supported application development consistency and a multi-lateral settlements
model to enable all stakeholders to add values to deliver the services to get paid. “Vodafone Live
used a home-built SDP to launch its offering back in 2002, a product that provides an integrated
service across handsets, networks, content and services”, and also includes “video content, music
downloads and games” (Greene and Hayes, 2007, p.8). Subsequently, Service Delivery
Framework (SDF), indeed different from SDP, was defined by TeleManagement Forum (TM
Forum). “SDF weaves together various Service Delivery Platforms (SDPs, IMS, IPTV, etc)
offered by equipment vendors and their allied software vendors to allow uniform management of
services, easy to align with each Service Provider business model” (TM Forum, 2008, p. 20).
Vodafone was the first mobile operator in the UK to offer a portable laptop with built –in
broadband in the business sector in 2005. In 2008, the launch of the Dell mobile laptop with
integrated mobile broadband moved portable computing into the consumer market. Vodafone‟s
strategy differs from the other mobile operators in the UK and the operator ensures that the
embedded route meets end users‟ aspirations in both business and consumer market. “Vodafone
has a deal with Dell whereby the vendor offers customers buying netbooks and notebooks via its
website the option to include a 3G HSPA mobile broadband module in their devices, and to be
contacted by Vodafone to receive a SIM card and the mobile broadband service” (Roberts,
Mavrakis and Jesty, 2009, p. 270).
Betavine and the Joint Innovation Lab (JIL) are two API initiatives in Vodafone Group.
Betavine is a research and development project to create values around Vodafone‟s network.
Subsequently, Vodafone Group started the JIL initiative with its partners to use open APIs and
widgets to address the commercial environment. Web 2.0 technologies were considered as the
fundamental enabler to broaden service choice for Vodafone‟s customers and Vodafone Group
decided to create a service innovation website „Betavine‟ in 2007. Betavine provided Web 2.0
tools and resources so that developers can use to create innovative mobile services and get
6

10. feedback from the Betavine developer community. Its main objective was “to stimulate the
number of applications available for all mobile phones by providing an operator and technology
agnostic development environment”, and “Betavine has clocked up more than 180 applications
developed using the site across a range of categories, including games, utilities, mobile health,
and recipes” (Mendyk, 2009, p.29). More than 1,000 registered users are collaborating on
software development, and Betavine has enables Vodafone Group to learn much more from its
service incubation platform, both about Web 2.0 technology and its development models, and
about the types of mobile application that people want to create and which applications are
essential in the current market environment. Vodafone‟s product groups are “hoping that through
the Betavine initiative, they will gain access to „killer‟ applications that can be turned into mass-
market products” (Mendyk, 2009, p. 29). Subsequently, Vodafone Group has made a
commitment to provide a group wide network API that encourages developers to access
Vodafone‟s customers. Vodafone enables “developers to use its direct billing capabilities to
permit customers to pay for services through Vodafone accounts rather than credit card
payment” (Mottishaw, 2009, p.52) because a simple payment model has a great impact on
customers‟ choice of services.
In 2008, Vodafone, China Mobile, Softbank and Verizon Wireless announced the JIL
initiative to have common APIs and development environment. Vodafone Group launched the
„App Store‟ that encapsulated widgets from JIL that run in any devices and use the operator‟s
billing mechanisms to charge users directly. The combined customer base of JIL members
exposes applications to a potential 1 billion end users, by far the largest addressable market for
any application stores in the market today. JIL is working closely with several industry standards
bodies, including GSMA, OMTP and W3C, to encourage developers to use network enablers to
enrich their applications. JIL has launched a web site to provide the developers with service
development kit (SDK) and device API information to develop applications for specific handsets.
4.1.3 Group Technology
Vodafone Group‟s has driven the Group Technology initiatives that have managed and
controlled group-wide projects to orchestrate the move toward significant coordination and
identify and disseminate best practices to focus on expansion of service capacity while
replicating business models across a number of countries and maintaining cost efficiency.
Vodafone Group created two central functions, "Group Marketing (to drive revenue growth), and
Group Technology and Business Integration (to drive cost and scale benefits”, and “thy purpose
of Group Technology will be to lead the implementation of standardized architecture for
business process, information technology and network systems” (Hitt, Ireland and Hoskisson,
2008, p.345). The initiatives have supported the third generation (3G) network rollout, the
enhancement and expansion of Vodafone Live service to Germany, Ireland, Italy, the
Netherlands, Portugal, Spain, Sweden and then UK, and the development of Vodafone Group‟s
business offering on a global basis.
Vodafone Group has benefited from the effective and efficient Group Technology initiative.
First, Vodafone Group is given more strategic option for marketing and sales of its products and
services. Second, the time-to-market becomes shorter by consolidating its development resources
and sharing the solutions. Finally, cost reduction arises from avoiding multiple development
7

11. resources and environments and from consolidating demand according to the collaborative IT
solutions fro building IT platforms. Buchta, Eul and Croonenberg (2009) argued that “A
correspondingly worldwide uniform IT architecture with worldwide uniform business process is
the prerequisite, for example, for developing the advantages of a global customer management
from uniform coordination and universal organizations – with the lowest possible level of
country-specific individuality” (p. 73).
4.2. Bottom Line Improvements
On the other hands, Vodafone Group has capitalized on IT capabilities to implement its
strategic initiative, „One Vodafone‟ program, which transforms 16 operating companies into a
united operation to achieve streamlined cost effective and efficient group. Vodafone Group has
embedded IT sharing, outsourcing, and centralization and consolidation strategies in order to
achieve the objectives of the program. Radio access network are shared with the other mobile
operator, Orange, IT application development and maintenance are outsourced to IT outsourcing
vendors, IBM and EDS, and supply chain management function and European data centers are
centralized and consolidated to Vodafone Group. One Vodafone program is analyzed in depth in
Chapter V.
8

12. V. Using IT initiatives to transform the operator
5.1. One Vodafone
The „One Vodafone‟ program was focused on key initiatives to integrate business activities
to leverage economies of scale and scope of Vodafone group to transform the Group into a
streamlined, cost-effective and efficient organization while standardizing designs and processes,
reducing duplication, centralizing and consolidating certain functions and sharing best practices
across operating companies. The program was targeted at achieving £2.5 billion of annual pre-
tax operating free cash flow improvements in Vodafone Group‟s controlled mobile business by
the end of March 2008.
Alan Harper, Group Strategy and New Business Director, explained that “all our marketing
efforts, branding and product development are centralized”, “technology is standardized”,
“network design (switching, radio) are coordinated”, and “knowledge is shared via the HQ, HR,
strategy, and marketing departments” (Hitt, Ireland, and Hoskisson, 2008, p. 342). The program
was not just an integration of a few functions and countries but a strategic transformation that
Vodafone Group transformed 16 core independent national operating companies which had
diverse people and markets into a united operation “with a high degree of similarity with regard
to product, brand, position, advertising strategy, personality, packaging, and look and feel”
(McLoughlin and Aaker, 2010, p. 251) in order to achieve significant economies of scale and
scope. It was definitely supposed to be one of the most difficult challenges for Vodafone Group
but the transformation strategy has already resulted in “significant cost savings as well as
innovative market strategies, more competitive and differentiated pricing, and leading product
and service offering” (Booz Allen, 2006).
Vodafone Group predominantly embedded IT sharing, outsourcing, and centralization and
consolidation strategies to achieve the objectives of One Vodafone program that transform
multiple operating companies around the globe in Vodafone Group into a streamlined, cost-
effective and efficient organization. Vodafone Group adopted NetCo and ServCo business model
in the One Vodafone program. “ServCo is mandated to provide services over the
telecommunications network on the same terms as other service providers while NetCo is tasked
with managing the telecommunications network backbone” (Orbicom, 2007, p. 211). Network,
IT application development and maintenance, and supply chain and data centers were considered
as NetCo that Vodafone Group needed to pursue scalability globally to achieve the lowest unit
cost. Sales, marketing and customer management were relatively considered as ServCo that
Vodafone Group needed to achieve customer focus locally to improve customer experience and
build customer loyalty.
As a consequence, Vodafone identified key imperatives in One Vodafone program. Radio
access network are shared with Orange globally, and IT application development and
maintenance are outsourced to IBM and EDS, and supply chain management function and
European data centers are centralized and consolidated to Vodafone Group. On the other hand,
sales, marketing and customer management are relatively operated and managed by each local
operating company.
9

13. 5.2. Network Sharing with Orange
There are a number of different levels of network sharing deals and the most fundamental
scopes involve the use of common sites and towers around the globe. Complete network sharing
deals are also popular in some countries and these involve the building of a single network to
lease its capacity between two or more licensed mobile operators. Some of network sharing deals
involve radio access network that two or more mobile operators jointly deploy and own access
network. In the UK, India and some other countries, network sharing deals have been actively
encouraged by the government, and independent infrastructure companies have been established
by two or more operators.
Vodafone and Orange have established their network joint venture in the UK to deploy and
own their combined radio network. Their initial scope was limited to 3G network and Vodafone
and Orange planed to expand the scope to their 2G network infrastructure as well. Their
objective to establish the network sharing joint venture was to gain cost and operational
efficiency to deploy new 3G mobile internet access service. The radio access network includes
“mast, antenna, sites, site support cabinet and power supply as well as antennae, combiners and
transmission links, Nodes B (3G), BTS (2G) and the radio network controllers which are linked
to the core network”, and they are expected to expand their existing network sharing deals to
includes “the costs of engineering, maintenance, and technology, in a move which is expected to
save Vodafone (and Orange presumably) around US$1.45 billion a year” (Cellular-news, 2009).
During fiscal year 2009, Vodafone Group announced a number of significant sharing deals in
Germany, Spain, Ireland, UK and India.
5.3. IT Outsourcing to IBM and EDS
Outsourcing refers to the use of external organizations to perform some business activities
that were previously accomplished in-house and outsourcing is becoming more acceptable and
widespread in the telecommunications industry. Telecommunications operators re-evaluate their
core business and create added values in a fierce competitive market. The two different activities
are identified as non-core business activities that some mobile operators have mainly transferred
to outsourcing vendors: (1) IT services including IT infrastructure, desktop and servers, BSS
(Business Support Systems), software development and implementation, and deployment of new
IT services, and (2) network operations and management including network planning, site
acquisition and civil works, installation, network integration, network optimization and upgrade,
fault management, performance management, configuration management, OSS (Operations
Support Systems) administration, field maintenance, and hardware and software support.
First, One Vodafone program stipulated that the IT services for all Vodafone services in
each country be centralized. Vodafone Group selected IBM and EDS as key IT outsourcing
partners in 2006 although Vodafone Group had managed more than 2,500 suppliers and 3,800
external contractors before. Vodafone signed a seven-year contract to outsource “IT service
application and development, including BCC (Billing and Customer Care) and CRM (Customer
Relationship Management), to IBM for Vodafone‟s operations in Spain, the Czech Republic,
Australia, New Zealand, Portugal, Ireland and Greece” (Jesty, 2008, p.46), and it did at the same
time a similar deal with EDS in UK and other three countries including a total of 5,000 full time
10

14. employees transferred. The two deals were identified to reduce unit costs by 25 to 30 percent
within three to five years and these deals demonstrated Vodafone Group‟s commitment to
outsourcing non-core business and focusing on their core business. Subsequently, a wider
ranging IT transformation program was initiated in 2008 to gain more cost savings and identify
new opportunities.
Second, whether a telecommunication operator‟s network infrastructure is a critical asset or
not has been continuously argued in the telecommunications industry. Some operators has
considered their network as core to their business and been reluctant to outsource their
responsibilities associated with their network infrastructure to third parties, but other operators
are relatively beginning to recognize that network and its operations are no longer differentiated
core business activities and they are outsourcing all or some of network operations
responsibilities as a commoditized activities to third parties in order to focus on core business
activities to gain and maintain competitive advantages. Saxtoft (2008) argued that “the technical
network operations activity is becoming „commoditized‟ and that in the future healthy margins
and future growth are found mainly in the areas of service delivery and contents creation” (p. 41).
Vodafone India, Italy, Germany, Spain, Portugal, Turkey, Australia and other operating
companies in Vodafone Group have outsourced all or some of network operations
responsibilities to Ericsson, Nokia Siemens Network, and Motorola. The end-to-end managed
services are often tied into supply contracts. According to Jesty (2008):
Vodafone Australia signed a US$230 million, seven-year managed services agreement
under which Nokia took on responsibility for managing Vodafone Australia’s ongoing
network operations covering HSDPA, 3G, GSM and core networks infrastructure
including detailed design, engineering, optimization operations as well as network
management, fieldwork, and maintenance service for the networks (p.130).
5.4. Centralized Supply Chain Management
A supply chain is a series of activities in which materials move through from initial
suppliers to the final customers. In Vodafone Group, handsets, network equipment, marketing
and IT services account for the majority of Vodafone‟s operational expenditures. Centralized
Group‟s Global Supply Chain Management (GSCM) team has been driving „One SCM‟ to
leverage its scale to significantly reduce operational expenditures. One SCM delivers values
through robust integration across all Vodafone‟s operating companies to centralize and manage
most of the Group‟s relationships with their suppliers. A consistent supplier performance
management process has been implemented across the Vodafone Group‟s mobile operations and
key suppliers are evaluated in the six areas “covering aspects of financial stability, technological
and commercial criteria, delivery and quality management requirements and corporate
responsibility” (Vodafone, 2006, p.15).
GSCM has identified the best practices across Vodafone Group‟s mobile operations around
the globe in order to harmonize business processes that contribute to further reduction of
procurement costs and time-to-market. A business-to-business electronic commerce strategy has
been implemented to further increase transparency and control. GSCM is a major contributor to
cost reduction through a unified approach using global price books, global framework
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15. agreements, a standardized approach to e-auctions, the introduction of low cost regional sourcing,
and achieving best in class pricing for IT storage and servers. Its e-auction model has improved
the total cost of ownership and maintained strong partnership with leading partners in the
telecommunications industry. The e-auction in Vodafone Turkey helped achieve 42% of price
reduction to deploy new network. As part of the introduction of low cost regional sourcing,
Vodafone Group established China Sourcing Center in March 2007 to have access to and
accelerated development of low cost suppliers in order to build direct relationships with best
suppliers around the world, and sourced a total of £200 million from China in fiscal year 2007
and 2008.
In 2007, a global demand management application has been implemented as part of One
Vodafone program and developed to provide significantly improved coordination of Vodafone
Group‟s global purchase of handsets to reduce its inventory and obsolescence risks, and improve
its ability and effectiveness to encourage Vodafone Group to respond to rapid market
environmental changes. Saxtoft (2008) argued that “the ongoing consolidation of independent
telecommunications operators in Pan-European or global groups (Orange, Vodafone, Telefonica,
etc.) has considerably increased the negotiation power with equipment vendors” (p.41).
Vodafone Group can also leverage the power to coordinate pressure on mobile phone vendors to
develop Vodafone specific features and succeed in forcing them to produce and offer exclusively
designed and branded mobile devices to Vodafone Group. Vodafone has also used its
unparalleled clout in the negotiation with network equipment vendors such as Ericsson, Nokia
Siemens Networks, Motorola, and Nortel to squeeze their gross margins even though they
develop new differentiated technologies.
The Vodafone Procurement Company S.a.r.l. was founded and GSCM was centralized in
Luxembourg in 2008 in order to deliver further synergies across Vodafone Group through the
execution of global material strategies based on local market expertise. Vodafone Group
overachieved on its target of 8% saving of £3.3 billion external network spend through several
GSCM initiatives in 2008. As the results, GSCM consecutively won major industry awards. In
2007, Vodafone Group won “the European Leaders in Procurement Award for Corporate
Responsibility and the European Supply Chain Excellence Award in Sourcing and Procurement”
(Vodafone, 2008, p.18). “SCM won the „Team of the Year‟ award and was short listed for the
„Corporate Responsibility and Environment‟ award in the 2008 European Supply Chain
Excellence Awards” (Vodafone, 2009, p.17).
5.5. Data Center Consolidation
Vodafone Group delivered commitments on data center consolidation and optimization to
meet 25 to 30% savings within 3 to 5 years and £100 million of savings within 2 years while
consolidating from European-wide12 data centers to 2 central hubs. Data centers from
Vodafone‟s northern European companies have been centralized in Germany, while data centers
from its southern European companies have relatively been centralized in Italy in 2006.
Vodafone Group has maintained cost efficiency from its scale in purchasing IT equipment, and
operational efficiency in consolidating hardware, software, maintenance and system integration
suppliers that provide high quality IT infrastructure, services and solutions and in reducing
duplication.
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16. Although the data centre environment continues to be a major focus area for cost savings,
Vodafone Group has been building on the success of the consolidation and optimization program
by driving savings initiatives on server virtualization to increase utilization of 10,000 servers,
storage optimization to reduce online storage growth from more than 50% to less than 10%
annually, and alignment of architecture and service levels in order to deliver optimal service at
optimal cost. Application simplification is another area that is identified as the benefits of
reducing the number and complexity of applications to improve time to market for new products
and services and gain cost reduction. Significant savings, which have been made on Vodafone‟s
existing IT operations, have been reinvested in new products and services.
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17. VI. Conclusions
IT is everywhere, regardless of industry, size or country in business and a critical enabler for
organizations to perform their business operations more efficiently and effectively. Vodafone
Group is the world‟s largest mobile operator to manage ultra large-scale mobile networks
globally to provide a total of 333 million subscribers with its products and services. The operator
has a better understanding of the strategic values of IT as a source of competitive advantages to
continuously improve both top line and bottom line in order to achieve its organizational
strategies and objectives.
To improve top line, Vodafone Group has continuously developed and launched new
differentiated products and services beyond traditional voice and simple data services to improve
customer experience and build customer loyalty while adapting the advanced technologies faster
than its competitors, optimizing entire value chains beyond Vodafone Group and its traditional
suppliers and redefining industry, and focusing on the Group Technology activities to identify
and disseminate best practices globally. To improve bottom line, Vodafone Group has
implemented its strategic initiative, „One Vodafone‟ program, which transforms 16 operating
companies into a united operation to achieve streamlined cost effective and efficient organization.
Vodafone Group has embedded IT sharing, outsourcing, and centralization and consolidation
strategies in order to achieve the objectives of One Vodafone program. Radio access network are
shared with the other mobile operator, Orange, IT application development and maintenance are
outsourced to IT outsourcing vendors, IBM and EDS, and supply chain management function
and European data centers are centralized and consolidated to Vodafone Group.
Vodafone Group has developed group-wide strategy that is associated with its better
understanding of the importance of the customer experience to its business success. The Group
standardized on Siebel CRM platforms globally to collect, analyze and share customer
information across multi-channels, including customer service agents, sales and marketing teams
to gain a 360 degree view of customers, and measure and manage customer satisfaction,
customer loyalty, revenue assurance, revenue growth and profitability. Vodafone Group have
been committed to helping all employees reach their full potential through ongoing training and
development while Vodafone Group has embraced diverse workforce and offers equal
opportunities for all aspects of employment and advancement and created a leaner and agile
structure with clear accountabilities. Vodafone Group capitalizes on IT capabilities to enable all
employees to have access to a Learning Academy to deliver the one-stop shop for all learning
and development solutions.
IT definitely plays a decisive role in Vodafone Group as a critical enabler to gain and
maintain competitive advantages and to perform its business operations more efficiently and
effectively. Understanding the values of IT is essential for people in Vodafone Group in order to
successfully achieve organizational strategies and objectives.
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