Telstra is to embark on a major overhaul of its billing systems, switching to a predominantly Intel-based, open-source architecture in an attempt to rationalise the number of systems and platforms the telco currently operates, Telstra CIO Jeff Smith has revealed at an analyst briefing in Sydney on cost reductions.
Smith told Computerworld that outsourcer Electronic Data Systems (EDS) is already heavily engaged in work on the project, which will see a move away from current proprietary systems in an effort to dramatically reduce the operational expenditure confronting Australia's largest telco.
"The switch will be on the software side. The cost dynamics from a proprietary [system] to the Intel switch are around [a] 90% [reduction in operating costs]," Smith told Computerworld, adding that cost-efficient large enterprises were now engaged in a "big standardisation on platforms for Linux — that's the trend".
Telstra's director of productivity Hayden Kelly was left to reveal the full horror of the monstrosity that Telstra's 156 billing systems had become and repudiate the bad old ways.
"We have taken a siloed approach to billing — we have made billing too complex and too diverse — and there is significant opportunity to make savings. There are 87,000 billing options producing 103 million 'pieces of paper' per year. There will be a review of the vendor relationship for billing processes," Kelly said.
While Telstra is yet to formalise its decision, analysts have been widely briefed, some say placated, that any new mega-outsourcing deals are off the table — and any IT vendors employed to execute and implement new projects will be kept on a very short leash. Smith said that while EDS had been taken on, all significant human capital and intellectual property will now remain within Telstra.
"We don't need our providers doing our IP for us because they are not very good at sharing it. We're going to bring back a lot of our IP in-house — we outsourced too much," Smith said.
While not revealing specifics for any implementation time line for the new billing system, Smith told Computerworld that, "we have a billing blueprint on the table" and that decisions would be formalised by the end of October 2003, or eight weeks away.
"The plan is to consolidate and reuse around OS (open source) platforms. You have to become a full OS shop to survive. The great thing is that we have the capital assets and the intellectual property network already in place. What we have to do now is leverage that," Smith said.
Ultimately, Telstra hopes to reduce its IT budget from $A1.5 billion to $1.3 billion over three years, halving its applications, development and maintenance budget.
Smith said that apart from billing, data warehousing and customer care will also be migrated off current systems onto open source, with a projected reduction in total cost of ownership of around 65%.
Smith refused to comment on if, or how much of, Telstra's open source code cutting would be moved offshore —other than to say that nothing was being ruled in or out.