Telecom has abandoned its huge customer sales and service (CS&S) project, citing lack of continuing business benefit.
Though the project was originally estimated at around $50 million, sources within Telecom say the actual spending to date has been more than $100 million. Neither Telecom nor partner Oracle was prepared to comment on costs.
“It’s not a technology decision,” says spokesman Angus Barclay. “We called a halt based on business terms. It was not looking so good for the future.
“We’re looking at other ways to automate,” Barclay says.
Stuart McLean, Oracle general manager telecommunications Australia and New Zealand, says Oracle will forego a lot of revenue, which will affect both the Australian and New Zealand subsidiaries as well as Oracle corporate.
However, Telecom had bought the necessary Oracle licences last year.
When the deal was announced in 1996, Oracle chief executive Larry Ellison named it as one of seven key deals signed by Oracle that financial year. It made Telecom one of Oracle’s top 20 accounts worldwide.
“Telecom made its decision based on EVA [economic value-add],” McLean says. “We were proactive in getting them to the point where they could make that decision. We worked with them during the project and delivered the business benefits to date. Now we’ll redeploy our resources.” He says at last count Oracle had 20-30 people working on the CS&S project.
McLean points out that as part of the project Oracle delivered a data warehouse late last year on time and within budget. Telecom will get benefits out of the work to date, he says. “We used Designer 2000, and a lot of analysis was done up front. We delivered a technology infrastructure that allows them to develop open systems applications into the future.”
Sources within Telecom say this may not be the case because business requirements have changed massively since the original specifications were done.
The CS&S project had been process-driven with extremely complex methodologies. A new — as yet undecided — architecture will have to be put in place.
New IT boss Karen Devonshire is understood to be returning the business to former CEO Peter Troughton’s technical vision: one of connected software packages. She’s expected to move to rapid evaluation and selection within a couple of months.
CS&S is understood to have been a major bone of contention under the Performance 2000 project, which set absolute limits on budgets. The central project had grown to include other projects, which, in part, led to the greatly increased expenditure.
“Telecom should have walked from CS&S some time ago,” a source says.
The need for open systems was the reason Telecom chose Oracle in the first place, displacing technology partner IBM, whom Telecom decided after months of debate was “less open” than Oracle.
Worldwide, telcos have moved toward open systems, based on a perception that only open systems will allow them to keep up with the rapid change occurring in the industry. However, Telecom has probably been as much to the forefront as anyone.
To some extent it may have suffered from intervention of its American shareholders, Ameritech and Bell Atlantic, influencing some of the technology directions at director level.
Ameritech has announced it is selling its shareholding, and Bell Atlantic is using its shareholding as collateral to raise funds. What seems to have been forgotten is that both came into Telecom as short-term investors. And they’ve done very well financially. Whether they added anything in terms of strategic partnerships for the longer term is a moot point.