I read with great interest a recent article on the departure of Telstra's Senior vice-president of transformation - Tom Lamming. This Accenture partner had been taken into the company by CEO Sol Trujillo as a part of the US Executive influx at the start of his time at Telstra. He has now resigned from Telstra and returning (I imagine) to Denver and Accenture.
Lamming started out at Telstra as a consultant where he was paid up to $15,000 a day. Presumably less after he joined Telstra as an employee. What do you get for that sort of money?
But first, what was he paid to do? According to reports, his stated objectives were: a $12 billion, five-year transformation program that sought to develop common business processes for Telstra's operating support, customer care and billing systems. The aim was to save the telco hundreds of millions of dollars as 1,500 legacy systems were consolidated down to 'between 250 and 300 by 2010'.
Accenture Global Convergence Forum 2007, 11-13 April, 2007 in Rome, Italy. 'Driving Transformation Through Innovation' by Sol Trujillo.
What I am particularly interested in is the interim report card for the transformation project 4 years into the 5 year project. Here it is as far as I understand it:
On the plus side:
- Seven million Telstra private customers have migrated to the new platform (an application that crashes a lot is still an application)
- 400 of the 1,500 legacy applications have been retired (with one year to go).
And on the negative:
- Only 250,000 business customers had been moved across
- Reportedly, the budget is blown by more than $1 billion
- Of the 1500, by 2010 Telstra hopes to reduce that figure by 80 per cent. But with a year left, only 400 have been switched off.
- More than 3,300 change requests have been issued
- Related to the last point, the 'fixed price' contract with Accenture has reportedly blown out from $350 - $400 million to almost $600 million. Plus there must be a significant cost to keeping all of the remaining 1,100 legacy applications running
- Presumably no net savings have been made so far (given all of the figures reported).
On the face of it, this is a pretty poor result. Don't be fooled: it is a poor result. No wonder CEO's, CFO's and CIO's are so worried about starting major transformation projects like this.
Telstra are not alone in achieving this level of poor performance, but it makes me weep when avoiding these problems is so easy.
Can anyone spell 'fiscal discipline' anymore?
So where was the effective governance in this program? Why was such a transformation project agreed to in the first place if governance wasn't the number one priority? Apparently performance tracking of the project was missing - or at least ineffective.
Transformation is always difficult. You succeed by breaking the problem down into small, measurable chunks that are delivered on an agreed schedule throughout the life of the project. Big bangs are bad. Period.
When you've done this you then put into place people with the backbone to govern the project and demand that the project deliver as promised - and if they don't then to understand why and judge whether-or-not investment continues.
Why is this so difficult?
The point about all of the above is that hopefully Telstra will learn something from this experience and bring the transformation project to a successful conclusion. I for one will cheer for a Project Manager that delivers this outcome. Even at a starting rate of $15,000 a day - that would still deliver bottom-line profits to Telstra.
I'll be brushing-up on my American accent for my next interview!
I'll leave you with Mr Lamming's own opinion as reported in the papers: