Business Transformation of Telstra Corporation Limited

Business transformation is one of the inevitable aspects of business management in the current market. Many different companies have currently undergone transformation to adopt modern technologies. This has resulted in re-organization and restructuring of the company’s management to accommodates these changes. The two main criteria that have influenced the business transformation are digital transformation and program or portfolio management system. Organizations have reorganized its business units into programs or portfolios that are majorly accompanied by the technological application of the digital system to enhance these transformations. One example of companies within Australia that has undergone business transformation is Telstra Corporation Limited. The company in the past few months has announced major changes to its structure and organizational hierarchy. There are many different transformation selection criteria that assisted in selecting business transformation model. In addition, the implementation of these business transformations is also peculiar to the specific organization following the development of a strategic plan for transformation. The following paper explores business transformation case of Telstra.

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Table of Contents
1. INTRODUCTION.............................................................................................................................2
2. Overview of Organization.................................................................................................................2
3. Business Transformation of Telstra Corporation Limited.............................................................3
3.1 Organizational simplification.............................................................................................................3
3.2 Organizational restructure.................................................................................................................4
3.3 Standalone infrastructure business...................................................................................................4
3.4 Cost reduction portfolio management..............................................................................................5
4. Selection of the transformation.........................................................................................................5
5. Implementation of the transformation.............................................................................................7
6. Advantages of Telstra business transformation..............................................................................9
7. Disadvantages of transformations....................................................................................................9
8. Comparison of major business transformations...........................................................................10
9. CONCLUSION................................................................................................................................11
10. References....................................................................................................................................12

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1. INTRODUCTION
Business transformation is one of the inevitable aspects of business management in the
current market. Many different companies have currently undergone transformation to adopt
modern technologies. This has resulted in re-organization and restructuring of the company’s
management to accommodates these changes. The two main criteria that have influenced the
business transformation are digital transformation and program or portfolio management system.
Organizations have reorganized its business units into programs or portfolios that are majorly
accompanied by the technological application of the digital system to enhance these
transformations. One example of companies within Australia that has undergone business
transformation is Telstra Corporation Limited. The company in the past few months has
announced major changes to its structure and organizational hierarchy. There are many different
transformation selection criteria that assisted in selecting business transformation model. In
addition, the implementation of these business transformations is also peculiar to the specific
organization following the development of a strategic plan for transformation. The following
paper explores business transformation case of Telstra.
2. Overview of the Organization
Telstra Corporation Limited remains one of the major company within Australia and
regionally being Australian largest telecommunication company. The company provides mobile
network, internet access services, market voices, pay television and other mobile services and
products. The company was founded in 1975 and has undergone a major transformation to serve
the international market. At the time of inception, the company has few products and service
which it has since then diversified to provide more products and services. The organization is

Programs and Portfolios Management 4
currently offering fixed lines and mobile telephony, network service, internet services, data
services and pay TV services. In order to adapt to current changes in the business environment,
the organization has transformed its product and service lines. The organization has in the recent
past undergone a major transformation that aims at changing the organizational structure,
management, and programs or portfolios (Quinlan 2011). The company restructures its
organizational units to introduce new forms of organizational units and systems. These units are
meant to reduce complexity to enable the company to realize its core mandates and functions.
Management has also been affected as the company introduces a new management system and
reducing some other management aspects. Telstra has since then re-organized the human
resources to hire some new employees while also firing other employees. An example of hired
employees is management staffs that will manage the newly created units. At the same time, the
organization has also reduced the number of its employees by more than 1400 staffs (Crozier
2018).
3. Business Transformation of Telstra Corporation Limited
Telstra has undergone many different transformations that enable the organization to
restructure its programs and portfolios. These business transformations are grouped into pillars
that assist in the implementation of these structures.
3.1 Organizational simplification
Digital simplification of products to reduce the organizational complexity that increases
management cost. The organization announced that it replacing its initial business program with
20 core portfolios that aim to utilize the digital system to increase transparency, accountability

Programs and Portfolios Management 5
and reduce the effort of many customers. This is similar to Birudavolu and Nag (2011) account
of digital transformation that indicates the evolution of companies into portfolios. Many
companies have in the recent past evolve their structure to introduce digital enabled portfolios
system and this is an example of Telstra that also changed its structure into 20 portfolios. To
simplify the management of the organization means a significant cost reduction and increase
efficiencies that the organization needs to perform within the market (Safrudin & Recker 2013).
3.2 Organizational restructure
Another area of the transformation of the company's business is on operations where the
company has developed a new model to enhance end-to-end operation. According to the
Safrudin and Recker (2014), the company removed nearly 2 to 4 layers within the organization’s
hierarchy system. The main aim is to reduce the complexity of organizational management and
instead set an operational model with shorter hierarchy. In addition, Telstra introduced an
expanded system of Product & Technology, Networks & IT, GBS to help simplify the customer
service delivery process. The organization structure is connected to the ease of operational
management that contribute to management complexity and cost. Changing the business
structure enables the company to reduce some redundant business units that do not directly
contribute to the success of the organization but add more cost of operation (Cruise 2017).
3.3 Standalone infrastructure business
The company also introduces a standalone infrastructure business that is separated as a
new business portfolio with a different management. The organization created a wholly owned

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infrastructure unit called Telstra InfraCo that manages data centers. The business infrastructure
unit will operate and manage some data related infrastructures such as fiber, HFC, copper,
international subsea cables, poles, exchanges, ducts, and pipes. The overall aim of the unit is to
control high-quality service delivery center that improves telecommunication as this is the main
target in the current business environment. The business unit will also help single manage the
facilities without adding its management tires to the major business management. Furthermore,
the business through its restructuring has also added the new business unit to its product
portfolios aiming at easement management (Shanks, Bekmamedova & Willcocks 2013).
3.4 Cost reduction portfolio management
The company embarks on program and portfolio cost reduction transformation that target
to reduce cost and increase profitability. The company reduces the cost of management by
bringing business close to the customer as compared to the previous structure. This is also
important for ensuring that services are offered effectively and with high efficiencies. In
addition, the company simplifies its product sets to ensure that customers are transferred from
the old organizational system to newly created programs. The organization also has proposed to
reduce the number of employees and increase the digital application of technology in the
management of the business operations. This cost reduction strategy aims to bring transparency
and reduce the complexity that attributes to the high cost of managing the business (Telstra
Media Release 2018).

Programs and Portfolios Management 7
4. Selection of the transformation
Selection of business transformation remains one of the most technical aspects of
organizational changes. Telstra is not exceptional when it comes to the selection of business
transformations. The organization uses various criteria to select the transformation pathways and
some of the criteria that the organization used include cost-benefit analysis, market trends,
stakeholders requirement, and research.
The company applied its cost-benefit analysis criteria to reach the decision to select
various changes that are experienced within the organization. The organization indicated that the
cost reduction was one of the drives to transforms the whole system as the organization needs to
cut cost and increase management benefit of the new structure of the organization. The benefit of
business transformation outweighed the expected cost of adopting and implementing changes.
Moreover, the organization cited various cost reduction process and the actual benefits in terms
of profit that will be obtained from the transformation (Trad & Kalpiü 2014).
Marketing trend has been one of the motivating factors that drive the transformation of
the business to ensure that the organization does not lag behind. With the current digital
transformation and programs redefinition trends in the business environment, companies need to
change their structure to enhance service delivery. This is the case of the Telstra that selected
business transformation following these two market trends. In order to match the market trend,
the company adopted program and portfolios system and digital transformation as core pathways
for business transformation (Muller, vom Brocke, von Alm & Uhl 2012).
Another area that was used to select the transformation pathways was stakeholders
requirements. The company has major stakeholders that include customers, shareholders, and

Programs and Portfolios Management 8
management. Customers as one of the classes of stakeholders require a quality service that is
near to them as compared to the complex organizational structure that reduces efficiencies
(Palermo, Bogard, Hexter, Hinze & Skinner 2012). Shareholders, on the other hand, require a
more profitable business model that ensures that their share gains more value. This enables the
company to look for a business structure that will increase profitability reduce cost and work
with flexibility. The last stakeholder is the management and plays an important role in the
selection of the business transformation. The management of the company has been working to
serve customers and this has been faced with challenges that needed to be improved. In addition,
the management wanted to increase closeness with clients or customers to reduce inefficiencies
and this assisted in selecting transformation (Oswick, Fleming & Hanlon 2011).
The intensive research is another aspect of selection criteria that largely contributed to the
digital transformation of Telstra. According to the management of the company, the intensive
research conducted on the business requirement and market trends enables the company to make
a decision on the type of business transformation to use (Trad & Kalpic 2014a). This was also
conducted by the management that cited some modern technological advancement that the
business needs to adopt. The result was selected business transformation model with its benefits
to both the company and stakeholders. As cited by Bak (2016), research acts as major selection
criteria as many companies conduct research before developing a strategic plan for
transformation.
5. Implementation of the transformation
The implementation of the changes within the organization caused numeral changes that
include restructuring of various departments into portfolios. Some of the areas that the company

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restructure during the implementation of changes include human resource, technological
structure, and organizational hierarchy.
The organization restructured its human resource portfolio through hiring and retrenching
of employees to meet its strategic plan. The organization upon implementation of the new
business transformation strategy hired many new staffs to take the position that has been created
with the new organization structure. For instance, the organization hired Michael Ebeid to run
the Enterprise team servicing Australian and international business and government customers
Advantages of transformations. The company also hired Nikos Katinakis in mid-October to
lead Networks & IT with the focus of extending the company’s network superiority and enabling
digital experiences (Trad, Kalpic & IMRAUSA 2014).
The organization also adopted various technological systems that aim to digitally
transform the organization programs. To implement various changes within the organization,
Telstra acquired technologies that help in organizing the organization programs and portfolios.
Some of the key technologies that the organization used to implement these changes include a
customer service system, data centers, and other new technologies. For instance, the company's
CEO indicated that the company has to adjust its technological capabilities with the use of
telecommunications, robotic technologies, virtual reality technologies, and other modern
technologies. Moreover, the management insisted after retrenching many employees that the
digital revolution is inevitable and therefore, the company was actually reacting to current
technologies (Chaffey, Ellis-Chadwick, Johnston & Mayer 2008).
Organizational restructuring is another area of implementation that the organization has
used to foster its transformations. The organization re-aligns its structure to form its 20 portfolios
that mainly consist of simplified core business layers. The organization implements this new

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structure that largely has technology at each level to help in simplification of customer service.
This restructuring involves combining various small programs into portfolios and each assigning
to a new management unit. A good example of the unit that has been created in the restructuring
of the organization is Telstra InfraCo that plays an important role in the management of data
centers and other facilities. The organization is also developing other business units that aim to
re-organize the structure of the organization so as to meet the current digital transformations.
(Lyytinen & Damsgaard 2011)
6. Advantages of Telstra business transformation
The business transformation of Telstra has enabled the company to realize many different
advantages. Some of these advantages include increasing production, reducing the number of
customer plans to speed service delivery and improvement of performance. Firstly, the
organization aims to increase production by more than 100% by 2022 and these will be from $1
billion to $2.5 billion. These are done through customer service plan changes that aim to improve
the legacy of the company within the country and internationally (Ulrich 2014). Secondly, the
company reduces the number of customer plan that enables the company to increase its
efficiencies hence increase service delivery. The company has reduces the number of customer
plans form the initial 1800 to 20 portfolios that are highly efficient to manage. The number of
consumer plans enables the company to manage its consumer plans into portfolios that each is
managed by a specific staff as this makes it easy to realize the performance of. Thirdly, the
digital transformation enables the increase performance of the organization's service delivery
process hence the company success portfolios (Norizan 2014).

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7. Disadvantages of transformations
Despite positives improvements that accompany business transformation of Telstra, there
are many disadvantages that are also associated with these changes. Firstly, business
transformation has resulted in the retrenchment of many employees. During the announcement of
these changes, the next course of action was to remove many workers within the system in the
bid to reduce the cost of hiring human resources. For instance, on the eve of the technological
transformation of the company announced in June 2017, more than 1400 employees were
retrenched. Secondly, the company has to incur the cost of acquiring these technologies that are
used to transform as the company had to acquire the required technologies. Telstra was reported
to have used more than $1billion during its transformation and there is even more when new
technologies are applied within the organization. Moreover, maintenance cost is another aspect
of the transformation that brings a high cost to the organization as the maintenance cost normally
recurs over a period of time (IBM, Service Oriented Architecture 2014).
8. Comparison of major business transformations
Changes that have been adopted by Telstra are not peculiar to the company alone as
many different companies have also undergone similar business transformations. Telstra
restructures its departments as compared to Apple Inc another telecommunication giant company
which was transformed to start making different products. Though Telstra has remained within
its operation area, Apple Inc introduced more products that particularly touch software and other
products. For instance, Apple Inc introduced MacOC Mojave as a new version of the software to
add to its existing product. This shows that Apple Inc is also transforming its product line
through the introduction of the more improved product as compared to Telstra that majorly

Programs and Portfolios Management 12
concentrated on the transformation of both organizational structure and product and service.
Telstra transformed its customer plans through re-organization its service delivery platforms
(Trad, Kalpic & StarAcademy 2014).
Another company that has also witnessed changes in the recent past is Vodafone a
telecommunication company that has also undergone some serious changes leading to business
transformation. Vodafone, unlike Telstra that came up with some small units, Vodafone has
transformed its business through the incorporation of other business into its portfolios. One way
through which the company has been expanding its operations is through the acquisition of other
businesses that perfectly match its product portfolios. In addition, Vodafone has also transformed
its business structure similarly to Telstra by developing a single platform with 20 operating
companies. Furthermore, the Vodafone also addresses the problem of organizational service
complexity similar to Telstra which reduce complexity through re-organization of the
organization structure (Trad, Kalpic & IGI 2015).
9. CONCLUSION
In conclusion, business transformation is an important aspect of business evolution that
enables the business to respond to changing business situations. Telstra has undergone a major
transformation that has enables the organization to bring new organization structure that also has
other introduced units. The organization has wholly transformed its business structure to enable
the organization to takes control of its customer service delivery. Moreover, the organization has
created some new units to help control its valuable assets. The company is comparable to other
organizations such as Vodafone and Apple Inc that has also undergone numerous business
transformations to better their business operations.

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10. References
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Birudavolu, S., & Nag, B. (2011) A Study of Open Innovation in Telecommunication Services:
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Implementation, and Practice. Pearson, USA.
Crozier, R. (Jun 20, 2018) Telstra completely changes how it sells enterprise services: Confirms
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Norizan, S. (2014) Business Transformation Management– Composition and Orchestration of
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experience, simplify the structure and cut costs. Telstra Corporation Limited. Available at
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