Telstra has claimed it reached a new “milestone” in its digitisation efforts following an announcement it intends to write down $500 million in legacy IT system.
CEO Andy Penn claimed the telco had already implemented “all the core technology architecture [and] all of the core platforms” on its mass market stack, and was now preparing to launch new products off them.
Although Penn admitted there was still “a lot of heavy lifting” to do, he remained positive about Telstra’s progress with its T22-related initiatives.
“There’s a lot of foundational work that needs to go into place,” he said. “And the really exciting thing is now we're at that point in the overall investment where we're starting to really be able to bring the benefits of some of that new functionality to bear.
“We're in the process of launching our new radically-simplified product propositions onto that technology stack and then we will start the process of migrating our customers to that technology stack as we've previously indicated was a critical part of our strategy.”
Specifically, Penn said the telco had launched a new “marketing cloud”, which he claimed will help “manage our interactions with customers through their journey through Telstra”.
He also pointed to a new pilot “console” scheme for Telstra’s agents, which he described as allowing “our agents internally the ability to actually front-end some of the legacy with a new front end which makes their life a lot easier as well.”
Telstra was unavailable at the time of publication to provide further details on these initiatives. However, Penn added: “As you will appreciate it's a very large complex integration of a number of systems."
The telco first announced its plans to replace its legacy business IT stacks, which span across its CRM, provisioning, billing and e-commerce systems, back in 2016. Since then, it has rolled out ServiceNow and replaced its Siebel CRM system with Salesforce.
On Telstra’s decision to write off $500 million legacy systems within the current financial year, Penn added: “It's not a gradual reduction in the [depreciation and amortisation] D&A associated with that legacy IT asset. It actually just cuts it off at the point in time where we've migrated customers and we're able to effectively move all the workloads onto the new assets".
Challenging times
Earlier this week, Telstra also announced it is expecting to have cut up to 6,000 roles by the end of the 2019 financial year, putting it "on track" to reach the previously announced net cost out target of $2.5 billion by the end of 2022.
This will increase the restructure costs for FY19 by $200 million, costing the company a total of $800 million.
Addressing the subject, Penn blamed the roll-out of the National Broadband Network (NBN), citing a previous market update that it will impact its earnings by around $3 billion.
“Telstra is reducing 8,000 full-time equivalents; one of the material drivers of that is the migration of part of our business to NBN,” he explained.
“The NBN today employs 7,500 people. So it's a consequence of reshaping our business in response to that but also in response to actually the other changing dynamics and opportunities in the market and where 5G is going and stuff so I'm really excited by the future.”
Although Penn added the changes were “challenging,tough” and “difficult for our people”, he reiterated that the wholesale network and fixed line provision was shifting effectively from Telstra to the NBN and was “a material part of all of this”.
Telstra’s outgoing CFO Robyn Denholm also added that the company was taking “a very aggressive approach” to its indirect workforce as well as “other costs as well” as part of an overall effort to save $2.5 billion.
However, due to a rise in handset prices and foreign exchange rates, Telstra admitted its FY19 operating costs would be higher, having previously forecast a flat rate.
