Telstra cuts the fat with 'Project New'

Summary:The nation's biggest telco Telstra has outlined plans to drive an extensive internal program of reforms that its chief executive David Thodey believes will transform the company's customer service experience and simplify its complex operations.

The nation's biggest telco Telstra has outlined plans to drive an extensive internal program of reforms that its chief executive David Thodey believes will transform the company's customer service experience and simplify its complex operations.

Robert Nason

Telstra's new group managing director, Robert Nason (Credit: Telstra)

The project, dubbed "Project New", will see some 500 Telstra staff implement 27 separate programs with the aim of reducing spending on external suppliers, improve customer service and field workforce productivity, simplify prices and reduce the company's ongoing costs.

Project New was kicked off three months ago, and is being led by a new Telstra group managing director, Robert Nason, who joined Telstra in February after a senior role at wagering business Tabcorp, as well as spots at EDS, AT Kearney and KPMG, for example.

Nason told an assembled crowd of media and analysts at a wide-ranging investor day in Sydney today that Project New was the largest change program embarked on inside Telstra since the company was privatised. Some $400 million had been earmarked to fund the projects, he said, although the initiative overall was slated to save costs.

Project New was being "intensively managed" by Telstra's board, as well as Telstra chief executive David Thodey and chief financial officer John Stanhope personally, Nason said. In addition, every member of its management team was on board with the vision and working on it.

In general, Nason said a number of internal initiatives had previously delivered productivity increased inside Telstra in specific areas, such as in the areas of network payments, general administration costs, simplification of its marketing initiatives and so on. However, he added, a comprehensive simplification exercise across Telstra had not been conducted for many years.

Some of the problems that Project New aims to resolve include the fact that less than 10 per cent of Telstra's sales and customer service interactions are through online and self-serve channels. The company currently has more than 8000 suppliers, and millions of unnecessary customer calls take place because of the complexity of its processes.

Too many customer orders need "remediation" after they are placed, said Nason, too many bills are incorrect, too many activations of customer telephone lines take more than seven days to go through, and so on.

Over the past year, Telstra has launched a number of customer service improvements to address some of the problems, such as initiating weekend appointments, scrapping charges when customers call with problems, linking the pay of its staff to customer satisfaction, creating a dedicated team to assist with those moving house and removed several fees, which the company describes as "nuisances", such as charging extra for extra email accounts.

The telco today said these improvements had already driven a one-third reduction in complaints to the Telecommunications Industry Ombudsman about Telstra problems.

Other changes have already seen some 345 management positions made redundant in an attempt to flatten Telstra's management structure, the telco's regional Country Wide division integrated with the rest of Telstra's consumer business, and a change in the way that Telstra makes capital investments, less centralisation and more control and responsibility by individual business units.

Telstra pricing plans are also becoming much more simple, with the company having reduced the number of its bundled plans from 19 to 10 over the past year. The company has recently dramatically cut its broadband prices, in a move that has generated anger on the part of other telcos.

On the IT side of things, Telstra is planning to use the agile delivery methodology to improve collaboration within its business. It as yet unclear to what extent its simultaneous overhaul of its wider procurement processes will affect its technology suppliers, but the company has commenced a widespread examination of its strategic sourcing, placing emphasis on its relationships with its top 100 suppliers.

Overall, the project reflects Thodey's new approach to customer service and addressing Telstra's long-standing issues with complexity as Australia's oldest and former monopoly telco.

"We need to change what Telstra stands for, it needs to become a customer-centric culture and not an engineering culture," said Thodey.

Topics: Telcos, Telstra

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