BT Global Services 's vertical market segments are generating more than 3.5 billion pounds sterling, or almost $6 billion, in revenue per year. And that isn't happening just by lumping similar customers together in a sales unit. Instead, BT has developed specialized expertise and, most recently, tied in its cloud strategy to create a set of global services that take advantage of its strengths in IT and networking. (See A Straight Look at BT's Vertical Clouds.)

Acquisitions matter
At the core of BT's strategy is a willingness to buy companies that help it develop its core industry segments -- financial services, government/health, consumer packaged goods and global commerce.

To better serve the financial services industry, BT's oldest market segment, the company acquired Radianz, then the largest financial services extranet, from Reuters for $3 billion and built its own trading system platform. BT Radianz is now a cloud-based financial services platform, which hit 15,000 member sites in April. (See BT Boasts Biggest Financial Cloud.)

"It becomes an asset that sits in the supply chain," says Neil Blakesley, VP of marketing, BT Global Services. "We provide the connectivity and the dealer rooms to about 60 percent of the traders around the world. A lot of our competitors have claimed verticalization by grouping their clients together in sectors, but our approach has been different."

In the health-care arena, where BT has played for more than five years, the company acquired systems and expertise to fulfill a contract with the U.K. government to build the National Health Service Spine. As general contractor, BT oversaw integration on a massive scale to digitize patient records in what became the second-largest European IT project ever, giving secure access to 1.3 million NHS health care staff in England and supporting care for about 50 million U.K. citizens. The project consumed 15,000 man-years of effort.

BT now is translating the expertise it gained as prime contractor of the NHS Spine into cloud-based and managed services for other health care providers.

"We developed intellectual property around the NHS deal that we are now talking about with another very large [potential client]," Blakesley says. "Most global service providers can offer a level of service beyond the provision of global MPLS, but -- what can we add to some sectors that is a core competency of ours that is stronger than what others can offer?"

For the pharmacy industry, BT acquired technology that enabled pharmaceutical companies to share data and results more quickly so that products could get to market sooner. Those technologies are now a cloud-based solution that enables big pharmaceutical companies to focus on where they can differentiate their R&D and products, and not on the information-sharing process.

The two older sectors, financial services and government/health, pull in the largest revenues, about $2 billion and $2.7 billion respectively. The consumer packaged goods sector is based on business from eight of the largest companies in that space, including Unilever and Proctor & Gamble, and generates just under $560 million annually, according to Blakesley, while the newer global commerce sector, an amalgamation of pharmaceuticals, manufacturing and logistics, brought in $271 million.

Picking and choosing customers
BT has further differentiated by focusing on a specific set of 62 large clients within those segments, and dedicated resources to learning their specific business needs. Blakesley calls it "a fairly Herculean effort to get the right people in the right accounts, the right assets in place and the thought leadership" for each multi-national client.

That approach paid off with Unilever, which extended a global outsourcing contract with BT through 2015, in part because BT was able to determine ways to cut costs by 10 percent in 2010 and 15 percent in 2011. Key to that effort was a new degree of standardized processes and economies of scale, better deals with third parties, and streamlining of governance and service processes to eliminate country-by-country variations that plagued Unilever in the past.

To make sure its people assets are aligned to deliver this client-specific service, BT also changed the way it handles those assigned to these large customers.

"We moved to a model we call client partners," Blakesley says. The BT teams own the entire relationship, including revenue targets, EBITA targets, margin targets and the customer relationship target, with the expectation that they stay with the client for three years. BT employees are mapped to specific customer accounts -- everyone devoting at least 70 percent of their time to Unilever, for example, is fully mapped against that client and reports to that client partner.

"We aren't just patching together people from the local service areas to do this, because that is always an issue," Blakesley says.

Nor is BT taking the more common approach of hiring experts from a given field and having them run the vertical units.

"We do have some industry experts coming in, some from our professional services operations and some from outside, that do have the ability to learn particular areas of the vertical expertise they need to know," Blakesley says.

The people BT uses in these client partner roles, however, have to understand its global portfolio and have the telecom and IT expertise to translate that into what works for the client.

What's next
BT is expanding its reach within each market segment to target a larger number of companies and may consider adding retail as an industry segment as well. But Blakesley adds that BT is cautious in its approach to segmentation, realizing there is danger in pursuing the wrong segment or even the right segment for the wrong reasons.

"These sectors at the moment represent good use of our core competitive capabilities, where we have assets or plan to buy assets," he says. "We want to focus where we are able to bring assets to market that will differentiate us in a particular segment, and not just do a product spin."

— Carol Wilson, Chief Editor, Events, Light Reading