Telstra's outsourcing agreement with IBM Global Financing for an online IT asset leasing system has helped the national carrier cut equipment management-related costs by around $3.6 million since deploying the system just over two years ago.
Until 1997, Telstra struggled to contain administrative costs tied to managing the organisation's 80,000 machines operating at over 1500 geographical sites nationally and 2500 individual cost centres, said Telstra's manager for IT financing Greg Statham.
"We identified some real business problems in the way we managed our IT assets," he said.
Telstra's goal was to eliminate the costs associated with managing IT hardware, including stocktakes, upgrades and new orders.
The telco's finance director, John Stanhope, said it was also key to get line-of-business managers to exert more control over the equipment in their own unit through greater transparency of costs.
Telstra's desktop and notebook base alone has a market value of around $300 million.
"Because IT staff had problems configuring and managing a pool of PCs of this magnitude along with other IT assets, any attempt to rein in costs failed; the cost of ownership just kept rising," Stanhope said.
In July 1997, a $225,000 integrated electronic leasing register from IBM Global Financing was piloted to manage the telco's complete IT asset lifecycle -- from e-procurement to asset management through to asset disposal.
According to Statham, the leasing register is the core of all IT requirements, managing the LAN help desk and all outside vendors for IT equipment and services.
"IBM buys all of our IT equipment from different vendors through the purchasing system -- fully leased and end-to-end in a paperless process," he said.
Since going live with the system in September 1998, Telstra has ordered $200 million worth of hardware, including PCs, servers and printers through the system.
The business benefits of the online leasing system are significant. Telstra reduced its headcount for IT accounting work by around 40 people, translating to $3.6 million in cost savings -- or an 80 per cent reduction in administrative costs.
Also, productivity levels in Statham's own team of seven IT professionals have increased as staff can focus more on the company's core areas of business, in-house IT projects and networks. The system has also helped Telstra cut its PC assets from 3 to 1.4 per employee.