I've posited that
Telstra will be severely challenged within 15 years due to Structural Change within their Industry. They aren't fast or agile enough to adapt to the new world..
What are the factors that will prevent them from adapting? My top two:
- Management Culture
- IT Infrastructure
An underlying problem is that we don't have language or metrics to describe and quantify the many important aspects of management. In Physics and Engineering we have many concepts and terms that are measurable to great precision. The importance of those is shown by the materials revolution over the last 100 years. For a tour de force on the topic, a book that's been in print for 45 years:
The New Science of Strong Materials.
Whilst "Management" and descriptions and theories about it has become an increasingly large field of study, we don't have a "Science of Management" with precisely defined and measurable terms.
This is crucially important when ownership (shareholders) and control (managers) is separated. The owners have no nuanced, standardised measures to evaluate the most critical part of the business:
management. All we've got is the Accounting Standard Reports provided in Annual Reports. This is far from enough to make informed decisions on a business' future prospects.
I can't detail or quantify the many problems of Telstra's Management Culture, just waive my hands and say "it's the vibe". E.g. they not only don't do Customer Service
well, they prioritise short-term cost-savings above good service and seem to go to great lengths to not resolve customer faults, at least in some areas.
Management is about doing what's important
consistently well, doing what has to be done
well enough and
not doing at all the things that don't need to be done. [And
avoiding entirely the things that should never be done.]
My Professional expertise is in IT Infrastructure. I hold a contrary view to the mainstream Management view of "IT is a Cost Centre". IT provides automated Business Processes, like employees directly responsible for all the Business Revenues:
IT is a Profit Centre, not Cost Centre.
We've already seen businesses failure due to their failed I.T. systems: One.Tel is a shining example.
IT Infrastructure has, for the last two decades at least, constrained business mergers. If I recall correctly, the St. George-Westpac merger was cancelled
twice due to "incompatible IT systems". Not sure how they solved that in the end.
Westpac itself is notorious for a decade long project, CS90, that was cancelled in December 1990. It was meant to be the ultimate Banking System (an 'ERP') that IBM would resell around the world for them. It was consuming 5-10% of Westpac's operational revenue.
The $10B Telstra "IT Transformation" under Greg Winn ran for around 5 years with the intention of reducing 1500 systems to 300. It failed to meet its targets and went live in 2009 with the 30% most valuable customers not migrated [from my Case Study evidence, now full of migration errors.]
The point: large businesses are inextricably intertwined with their IT Systems - they are part of the Business DNA and essential to the Business Differentiation:
What we do differently that people value.
Too often IT Systems are allowed to "grow like topsy" and are never rationalised or reorganised, presumably because no immediate savings or value can be demonstrated, but mostly because nobody is responsible for
everything and ensuring IT Systems are well maintained and suitable.
Leading to "Big Bang" projects like Telstra embracing of off-the-shelf ERP and CRM systems to resolve the mess. Inevitably they find that things are much more complex and intertwined than they knew, not the least because they have no correct, current
System Maps and the whole was never designed or planned,
it just happened. All of which suggests Management asleep at the wheel.
It will probably take Telstra 10 years to get staff trained, most, not all, data corrected in their new systems and workaround established to cater for what the new systems don't do.
But what will it be left with then? Will those systems be nimble, quick and responsive or big, cumbersome and so hard to change as to be effectively frozen?
Young, small companies start small and add functions as needed: the I.T. equivalent of "greenfields".
They don't carry of a legacy or mindset of "we have to cope with everyone and everything".
This is the commercial advantage small ISP's had over Telstra: no past, no baggage, just simple effective systems.
This will be the problem that Telstra will have to face again in 2020 as Retail Providers using the NBN challenge it. Telstra knows the pain, cost and delay in redoing their I.T. Systems, they won't be going there again anytime soon.
This is a generic and on-going challenge for all successful businesses, including those small, nimble Retail Providers: how to keep I.T. Systems from degrading into an unchangeable morass?
When Data hardens in Organisational Arteries and structures/processes ossify, a major Cardiac event will follow... More of the Same cannot fix the problems, radical rethinking is needed.
In an increasingly automated world, a problem looms for every large business:
what happens to the IT Systems when you downsize?
You get to drag the big, bloated corpse of yesterdays organisation along with you. It never gets better with age...
It's easy to lay-off staff and "reorganise", but I've never heard of any organisation looking to make commensurate simplifications to their I.T. systems.
I suspect that Large Business who aren't consciously and deliberately cleaning-up and refreshing their I.T. Systems will ultimately fail due to the complexity, inflexibility and inadequacy of their Legacy Systems.
You can lay off Staff and cut whole Departments, but where do you start with the weeds that permeate your whole organisation and choke the life out of it?
Once built, it seems you can't "Unring the Bell" of legacy I.T. systems, you're stuck with them and they define what you can do, while smaller companies whizz past you on their way to Market Domination and being strangled by their Legacy systems.
Jerry Gregoire as CIO of Dell Computers in 1999 talked about how he tackled this problem - and won.
When he joined Dell, there was a massive ERP project underway, "One System To Rule Them All". It was late, over-budget and failing. His first action was to cancel the project and front the board...
Instead, he moved Dell to a new architecture dubbed "G2", based around a message broker.
It reduces the N*N-1 or N-factorial system interface problem to one...
All every system needs to interact with every other system is
one 'message broker' interface.
It comes with a cost - you need infrastructure and rule sets to switch the messages. But at least that's a known, computable cost.
Dell Business Strategy Secrets
An ERP Package for You...and You...and You...and Even You
