Telstra loses grip on Woolworths

Retail giant Woolworths has abandoned a long-standing telecommunications outsourcing agreement with Telstra, choosing to move to a multi-sourcing strategy using the services of Dimension Data to integrate the services of disparate carriers.

Woolworths signed a five-year, multi-million dollar telecommunications outsourcing deal in 2003 but has since engaged in a 12 month review of its requirements.

The company now expects to save tens of millions of dollars annually by breaking up its telecommunications requirements into smaller chunks of work.

"The enterprise telecommunications market is changing rapidly and it is important to look at specialist players in the market with specific expertise and points of difference," said Woolworths Chief Information Officer, Dan Beecham.

"Woolworths currently uses one provider for telecommunications services across the whole business," Beecham said.

"As a result of the review, we will take a flexible approach to telecommunications procurement, establishing a framework that encompasses a range of services modules.

"This approach will enable us to better leverage Woolworths' internal capabilities and combine them with the expertise of individual service providers.

Three tenders

Dimension Data has been awarded a five year contract for the management of data services (data centre), telephony (routing and switching), security and related infrastructure across Woolworths' food and grocery, liquor, petrol, general merchandise and consumer electronics retail businesses.

Woolworths has also released tenders for fixed voice services and for data network services - the winners of which are expected to be announced in the coming months.

Telstra has confirmed that it will attempt to compete for these tenders.

"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," a spokesman for the telco said.

Dimension Data will manage the contract relationship with the winners of these tenders.

Woolworths' internal IT team will handle mobile telecommunications and video conferencing. Support services will be provided by Woolworths' internal IT team and Dimension Data.

No commercial terms were released.