MCI Merger Bogs TRS Effort For BT North America Inc.

BT North America Inc.'s U.S. trading room data distribution system sales efforts have ground to a halt as a result of the vendor's merger last year with MCI Communications Corp. (Wall Street Network News, June 8, 1993). Two key sales and marketing executives have left BT's TRS group and have not been replaced. Meanwhile, BT's U.S. trading room telephone turret effort may suffer too from the lost ability to cross-sell voice and data systems.

While the BT/MCI partnership was meant to improve and simplify account management procedures for both telecommunications companies, the two thus far show no sign of finding a corporate home for the U.S. trading room systems business. The merger -- in which BT will spend some $4.3 billion on 20 percent of MCI -- was aimed at consolidating both vendors' European businesses under U.K.- based BT and both vendors' American businesses under U.S.- based MCI. However, because MCI has never targeted the trading room, BT's U.S. trading room system effort remains an orphan within the new structure.

Following the announcement of the alliance, BT lost, and has yet to replace, its director of indirect and specialized sales -- which includes trading room systems -- Bill Doucette, as well as financial marketing and product manager Ingrid Howe (TST, Oct. 18). Doucette has returned to BT's outsourcing unit, Syncordia Corp., where he previously worked; there he takes the title of director of planning. Howe defected to Digital Equipment Corp.'s trading room systems sales group last fall.

BT officials decline to comment, but a spokesperson provides the following statement: "I don't think there is any issue over account management. [Accounts] will be managed depending on where the account is headquartered. Trading turrets will be handled separately by BT. Trading systems will be managed globally by BT. Networks will be managed wherever they're headquartered." The spokesperson says that in those MCI-inherited accounts that include services only BT provides -- such as TRS accounts -- there will "also be involvement" on the part of BT.

However, sources close to the vendor cite a lack of strategic direction, poor morale and unresolved account management issues within the TRS group. A key issue is continuing to satisfy customers, many of them TRS users, that have been guaranteed a single point of contact for a wide-ranging menu of services. These sources also say that more staff departures are likely among those remaining in the trading room group -- now numbering fewer than ten. In particular, these staffers are vulnerable to headhunting by MCI, sources say.

One source says that BT's product development and marketing could be moved entirely to the U.K., making it difficult for U.S. customers to remain involved in BT's systems development efforts.

Doucette, who was reassigned from his BT post last month, covered not only trading room systems, but also video conferencing and what BT calls tailored sales -- which is the vertical selling of telecommunications packages to particular customers.

Doucette's configuration of responsibilities also contributed to the orphaning of U.S. TRS: Tailored sales is one the main business categories BT was anxious to offload to MCI. While Doucette takes tailored sales to the Syncordia subsidiary -- a unit sources say will in turn form the core of a new BT/MCI joint global network services entity (still known as Newco) -- trading room systems are once again left in limbo. BT vice president of sales James McDonald -- who previously had no direct oversight of TRS -- has assumed some of Doucette's responsibilities, but BT's plan to build a larger U.S. TRS sales force has been abandoned.

As for filling Howe's shoes, one source says that BT has held off on replacing Howe until all outstanding account management issues are settled. In the interim, one of Howe's chief duties -- that of supporting existing BT video switches -- has been entirely neglected, says the source.

Meanwhile, morale throughout BT North America has been suffering. Two weeks ago, staffers began receiving letters telling them whether BT had elected to retain them, post them to MCI or Newco, or fire them. Since that time, MCI has been targeting BT staff, trying to woo them over to MCI before the two carriers formally settle who is entitled to what, sources say. At the same time, some MCI staffers accuse BT of cherry-picking not just staff, but the customer accounts it will ultimately retain. The resulting atmosphere is less than collegial, sources say -- and doesn't even begin to address anxiety arising from the serious business challenges the two vendors have now to confront, such as how to unify contract terms and billing.

Sources say that the assignment of national and international accounts has been a subject of debate at BT since long before the alliance. In a major reorganization last year, BT tried to resolve the problem by focusing on 150 global accounts, including 25 to 30 key Wall Street accounts (WSNN, Feb. 26, 1993).

BT North America and its U.K. parent often diverged on issues of account management. BT North America fought to retain control of key accounts based in the U.S., while the U.K. tried to bring the global accounts under its control.

For example, account managers at BT North America would argue that an account such as Chase Manhattan -- a user of many BT products and services, including BT's video switch, data and voice communications, and telephone trading turrets -- should be treated as a national account, because of its U.S. headquarters. BT staffers in London argued that the bulk of the carrier's business with Chase was centered in Europe, making Chase a global account that should fall under their domain. (Chase has since indicated that it would diminish its business with BT by signing Teknekron Software Systems Inc. as its market data distribution system vendor. The bank's decision on new trading turrets is still pending [TST, Nov. 1, 1993].)

Sources say that the issue of account management is particularly difficult to resolve because several customers for multiple BT services -- for example, voice and data communications, trading turrets and video-conferencing -- have contracts that guarantee them a single point of contact. If these accounts are handed over to MCI, these customers may have to cope with MCI managers with no experience in the field of trading systems, turrets, and the other specialized BT products and services geared for the financial community.

BT's video switch customers represent the bulk of BT's North American trading room systems business. Several of these firms -- which include Bank of Boston, Bank of Bermuda, Chase Manhattan Bank, Credit Agricole CNCA and Oppenheimer & Co. -- had taken steps to replace the BT equipment before the alliance, but the doors remained open for possible sales of other BT products and services. Now any lingering good will these customers might have retained for BT is at risk, sources say.