Woolworths breaks up Telstra contract


Retail giant Woolworths this morning flagged plans to break up its long-standing corporate telecommunications mega-contract with Telstra into a more flexible approach which could encompass multiple providers.

Telstra has held the Woolworths work — which is expected to run into at least the hundreds of millions of dollars — since 2003, when it won a five-year contract to service what was then the retail giant’s empire of more than 1,500 sites across the nation.

But in a statement issued this morning, Woolworths chief information officer Dan Beecham said the completion of a review into the retailer’s telecommunications needs would see the deal restructured.

“Woolworths currently uses one provider for telecommunications services across the whole business,” he said. “As a result of the review, we will take a flexible approach to telecommunications procurement, establish a framework that encompasses a range of services modules.” Tenders for those modules have already closed — with Woolworths saying it would announce winners in due course.

Beecham said the approach would see the company better use its internal capabilities, while also providing Woolworths with greater scalability of services and cost savings. The review had identified the change to gain productivity benefits through a more flexible arrangement, as well as increased efficiency.

“The enterprise telecommunications market is changing rapidly,” said Beecham, “and it is important to look at specialist players in the market with specific expertise and points of difference.”

“Woolworths is a great Australian company and we will continue to talk with them about the value Telstra can bring in the other service modules,” said a Telstra spokesperson.

The first big winner from the restructure is systems integrator Dimension Data, which has picked up an overarching contract with Woolworths as integration services manager for its telco needs.

Beecham revealed Woolworths had inked a five-year deal with DiData of undisclosed value following a request for proposals process, covering the management of data services, telephony, security and related infrastructure across the company’s food and grocery, liquor, petrol, general merchandise and consumer electronics retail businesses.

“Dimension Data’s remit will cover governance, contract management and relationship management, architecture and technical leadership, account management, transition, and service delivery management,” said Beecham.

Image credit: Agata Urbaniak, royalty free