Tech at forefront of Telstra AU$800m savings plan - News - Communications

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This story was printed from ZDNet Australia.
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Tech at forefront of Telstra AU$800m savings plan

By Iain Ferguson, 0
August 29, 2003
URL: http://www.zdnet.com.au/news/communications/soa/Tech-at-forefront-of-Telstra-AU-800m-savings-plan/0,130061791,120277909,00.htm

Telstra has unveiled a cost reduction strategy targeting savings of up to AU$800 million over the next three years, with information technology at the forefront of those plans.

Telstra executives, including chief financial officer David Moffat and chief information officer Jeff Smith, detailed the initiatives -- described by Moffat as "vast and deep" -- at a market briefing in Sydney today.

The briefing came one day after the nation's dominant carrier -- and the 14th largest worldwide by market capitalisation -- announced a profit of AU$3.43 billion for the year ended 30 June, above analysts' expectations.

The profit figure -- down slightly on last year's result -- was heavily impacted by the write-down of its AU$1 billion investment in the Asian cable venture Reach.

Moffatt said productivity and cost containment plans -- which would save between AU$600 million and AU$800 million over the next three years -- were focused on every aspect of Telstra's business, domestically and offshore.

Smith said the company planned to reduce its overall information technology spend on goods and services by 50 percent over the next three years.

The company planned to slash 15 percent from its AU$1.5 billion applications, development and maintenance spend this financial year, on its way to a 50 percent reduction of that figure by 2005/06.

Smith also identified the company's key strategies for infrastructure transformation by 2004/05 as;

lifting internal midrange operations to match competitors, with the aim of reducing provisioning unit costs by 25 percent;
consolidating and standardising Unix and Intel server platforms, with the aim of increasing server utilisation by 50 percent and storage utilisation by 25 percent and;
consolidating stand-alone storage to network-based storage and utilising open standard, commodity-based infrastructure such as Linux, the aims being to slash server and storage maintenance unit costs by 30 percent and reducing storage unit costs by 40 percent through use of lower-cost storage.

The chief information officer cited as an example of the effectiveness of the company's new tech strategies the fact a new data warehousing project, using Linux on Intel in a network attached storage environment, had achieved a 65 percent reduction in total cost of ownership over the data warehouse presently deployed.

Telstra's business transformation project is being driven through the Six Sigma business process improvement techniques, with more than 150 such projects underway and 1900 people trained over the past two years.

The carrier said it had booked AU$30 million in 2002/03 in savings related to Six Sigma projects "and expects this to grow substantially as projects are delivered".