Vodafone out to cut costs in IT review

By RICHARD PAMATATAU

Mobile network operator Vodafone is reviewing the relationships it has with 200 technology suppliers in a project called "Simply Red" as it looks to cut costs in the face of mounting competition from Telecom.

It appears likely Vodafone will whittle down the number of tech companies it deals with, mirroring a programme of consolidation Telecom went through when it set up large outsourcing deals with Alcatel and Lucent.

An assessment of Vodafone's IT systems has just started and the company expects to be able to announce changes in two to three months.

Vodafone's general manager of service operations, Tony Catford, said the company was looking across the board at how it used technology both inside and outside the operation.

"There may be cases where suppliers can do things better," he said.

"What we do want to do is make sure that we keep everything in the supply area around technology contestable."

Vodafone is starting work on building its third generation (3G) network, said to be worth about $500 million, using equipment from Finland's Nokia.

But it is still to decide on suppliers for the layers above the infrastructure that will offer customers services to make the network useful.

Catford said speculation that the company wanted to chop its technology suppliers back to 50 was wrong.

It was not a "numbers game", he said, but refused to reveal how much the company spent a year on technology and related services.

He also declined to reveal the number of staff working on the project or how many might be affected by future developments.

"This is not a secret project and is also about business improvement," he said.

Catford said the project was New Zealand specific, and it was not being driven by an overseas initiative.

"It would be nice to think that if it is successful it might be used as a model in other countries."

Last week, management consultants were in Auckland from Australia taking senior managers through a range of development courses designed to help a growing organisation manage things better.

Catford said those courses were nothing to do with this project.

The review did not mean Vodafone would outsource its entire IT in the way that Telecom had with giant EDS.

It was, however, looking at every technology used on the corporate network from the operating system upwards. That meant companies such as Microsoft, for example, might see their relationship with Vodafone change.

IBM landed a contract recently with Vodafone for its billing services that was worth millions of dollars. It was continuing, unaffected by the IT rethink, said Catford.

Vodafone also recently extended its cell-site maintenance contract with state-owned BCL. That means BCL now looks after Vodafone's South Island sites, replacing Downer, which services Telecom.