Telstra denies bank contract on the rocks

The allegations by a self-styled "expert on the IT game at the big end of town" took the form of a letter to the editors of the controversial Crikey Web site. The letter was published by Crikey in Thursday's e-mail newsletter, and alleged that the desktop outsourcing contract that the National Australia Bank (NAB) signed with Telstra in 2002 "has incurred big losses for Telstra as no due diligence was performed before they took the business on".

As a result, the letter claimed, "Telstra management have spent the absolute minimum on upgrading equipment in an attempt recover losses. NAB is still running Windows NT 4 - totally unsupported within the industry. NAB is cutting backroom deals with vendors to keep purchasing old equipment as new computers no longer run Windows NT 4." The letter went on to advise readers to "keep watching for more big changes at NAB as they prepare to pull their business from Telstra."

However, denying any bad blood, Telstra spokesperson Warwick Ponder told ZDNet Australia : "The allegations made on Crikey.com about Telstra's relationship with the NAB are untrue. Telstra has a very good working relationship with the NAB, formed through many years of working together. Telstra did perform due diligence on the NAB desktop contract including a pre-contract sample audit, followed by a full audit of all NAB desktops, processors and legacy equipment."

NAB spokesperson Brandon Phillips confirmed this afternoon that at least one part of the letter was correct. "We are running Windows NT 4, that's a fact. We will be migrating across to XP," said Phillips. And Telstra's Ponder agreed, saying: "As part of the contract Telstra is working with the NAB to upgrade their operating system from NT."

Ponder also addressed claims in the letter that Telstra has been "continually shuffling their executive management team for outsourcing and that Rob Roe, "who has been in the executive manager's job for just over 12 months," is being "shuffled into KAZ as a business development manager". Telstra acquired ICT services business KAZ Australia in July 2004.

"The claim that Telstra continually cycles the management team for outsourcing is also untrue. There have been no changes to the Telstra management team working on the NAB contract for 14 months. And Rob Roe continues to have responsibility for the NAB relationship. The NAB contract was negotiated in 2002 for a three-year period, and was subsequently extended to five years, so it's due to finish in 2007. We undertake a regular relationship survey with the NAB commercial team, and it has rated Telstra very highly," said Ponder.

NAB's Phillips declined to comment on the relationship between the two companies, saying: "Telstra's obviously a major supplier to us, but I'm not certain that we'd go into the details of our arrangements with suppliers, except to say that we work with all our suppliers to make sure we get a good outcome from both sides."