RSS feeds“I don’t think there was another public corporation whose accounting standards were as low as British Telecom’s,” Doug Perryman, its then finance director, said when we interviewed him in 1984. “The finance function was stuck like a limpet on the side of a battleship, but having nothing at all to do with driving it,”
Compare that to how BT looks today. It has just emerged from a huge reorganisation; earnings per share have doubled and net debt has halved since 2002; and the City is on board.
Financial Director and our sister publication Accountancy Age have interviewed many of BT’s finance directors through the years. Revisiting what they said offers a fascinating look at how one of the UK’s most famous institutions has transformed its finance function.
The current group finance director, Hanif Lalani, is appreciated for his candour and open approach to taking stakeholders and investors through the group’s strategy. It is a tactic he has employed avidly to help the group shake off its public sector image.
He understands the radical transformation through which the group has had to travel to remain a competitive player and one of the
benefits of working for the same group for so long is that he knows “exactly what levers to pull, what action to take, who to call and what to do to make things happen”.
Despite his loyalty to the telecoms business, he isn’t blinded to its failings. He acknowledges that the stand-up-and-speak-your-mind culture still doesn’t exist – yet it’s something he strives to nurture in his 1,400-strong finance team.
Feedback from the equity markets demonstrates a strong faith in his leadership and the performance of the finance team. Shareholder returns over the past two years have been around 20%, he says.
During the past three years, mostly under the aegis of Lalani, the company has wiped out more than £60m in finance costs through centralising the team and removing duplication and repeat processes in each department. “We have streamlined the way we work, taking out £65m-worth of costs over the past three years,” he says.
Costs have been reduced through outsourcing and offshoring certain aspects of finance, such as the low-cost, high-volume transactional processes.
“It’s very easy for a big organisation to become divisionalised and silo-based, for every division to have finance within the team. We moved away from doing everything everywhere to doing it once for the organisation,” says Lalani.
As well as systems changes, he has focused on the development of his team, bringing in finance staff from different industries and companies in order to instil new blood into a team more used to doing things in a public sector way.
“It was important to mix the two: those that we trained in-house and those from outside. I want a highly motivated finance team that thrives on change and wants to make changes because we’re in a fast changing industry.”
He has created a fresh finance business and is, in short, a modern FD, as happy explaining the figures to the investors as he is talking you through the sophisticated new technologies the group offers. If BT can hold its nerve within the fast moving industry and Lalani can continue to foster a private sector environment in a business long used to public sector sluggishness, the group will remain a strong and determined player.
Today, BT is a completely different company in terms of the strength of its finance team and the quality of its financial planning to when Doug Perryman first joined the company 25 years ago - then, just 60 of 250,000 employees were qualified accountants.
Additional reporting by David Rae
