IT, networks on Telstra's chopping block

Telstra wasn't very open on how many ICT jobs would be lost as a result of its strategic review announced today, but CEO Sol Trujillo did indicate IT systems and networks would continue to be rationalized in order for it to remain competitive.

After lamenting Telstra's "dramatically" growing retail and wholesale expenses, and the limited potential of its existing PSTN infrastructure, Trujillo said IT has "added a lot of complexity and cost".

"Obviously our network and IT infrastructure and to some extent architecture has been affected by an original design that started decades ago that was built for a purpose different to the kinds of service capabilities that are being offered today," Trujillo told an audience of shareholders in Sydney.

"And as a result we a have had a lot of things added onto our networks and our IT infrastructure has added a lot of complexity and with complexity comes cost."

Telstra is looking at networks, systems and processes, and allocating resources within the business "because that is as important as any company making the right bets and betting on the right technology and people".

"When you look at the infrastructure we have today we have too much of everything," Trujillo said. "We have multiple networks, multiple fixed-line networks, multiple wireless networks. We have over 1200 systems embedded in our business today [and] we have over 150 call centres."

The same company also had over 1000 products, 20 ad agencies, and 41 buildings in Sydney and Melbourne alone.

Trujillo's vision to "integrate the company and its services" providing consumers with a seamless "one touch" experience across every type of device will all be enabled with the "fundamental restructure that is needed". All of this will be enabled with "next generation" IT and networks, or "the plumbing".

"There is a whole lot of network that has been added onto the existing switched network" he said. "It was bolted on over the last few decades in terms of how this business has evolved."

Despite the enormous challenge ahead, Trujillo isn't kidding and estimates between $2.5 billion and $3.5 billion will be required to transform the business, networks, and IT.

"So when you think about new services, new capabilities you always have to think about how you can execute and implement it, and with that comes more cost," he said, adding vendors will also be more accountable as Telstra looks at which suppliers "can bring the greatest capability to help us do and execute on the vision we have for this business - it is about technology."

Regarding layoffs, Trujillo announced 12,000 job cuts over the next five years which will affect both permanent and contract staff.

One example of this rationalization is Telstra's desire to have all of its 10 million customers on one data warehouse to be used for more targeted marketing campaigns. Telstra's group managing director of strategic marketing, William Stewart, said with a single customer view, the company can move from doing "100 campaigns to thousands of people to thousands of campaigns for hundreds of people".

The three-tiered architecture will have the enterprise data warehouse on the backend, modelling, analytics and reporting in the middle, and services like sales force automation and fault management on the front end.

The resulting "fully segmented, integrated customer experience" is due in 2007.

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Rodney Gedda

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