Summary of the AT&T Self Destructive Upgrade Project

Since November 23, 2003, under Federal Commission rule, customers of a certain carrier have the rights to keep their original phone numbers even if they switch to another carrier. Under this external complication, the already problematic upgrade project of AT&T’s CRM system collapsed which cost loss in revenue, loss of customer to its competitors, loss of reputation and high turnover (layoffs). As one of the older phone service carriers, AT&T has slipped from being the market leader to a second ranked carrier with market share dropping of 25% to 17% from 2003 to 2001. To catch up with their competitors, AT&T started to upgrade its phone network that can not handle data transfer through phone to a new network-global system for mobile communication or a GMS that added capacity to global compatibility to overseas providers. However, the transition was not well accepted by customers. To improve not only the quality of customer service, but also the efficiency of customer service representatives, AT&T started to upgrade its complicated CRM (Siebel) to a highly customized Siebel version 6 with software that has an integration tool holding the systems together. This Siebel 6 still could not meet all customer representatives’ expectations. In spring of 2003, they started the project called “Odyssey” to move over to the new GMS and Siebel 7.5 that they were developing. This upgrade project, involving roughly 15 systems, had a bad beginning. Changing the system to web based was a complex and large scope project because it required ripping off all the links which were established in Siebel 6. Creating each new link would require at least 20 or more people to write up. Another problem was that each team worked independently. Sometimes one team would finish testing a part but would find the code of some other parts changed. Also, there was rumour of outsourcing and future layoff that lowered the morale of employees leading to low productivity. Staffs even looked for other jobs during the project. A new project manager had replaced the former CIO which intensified problems employees were having. AT&T should understand that for such a complex project to succeed, they should have a flexible schedule and a back up plan while there was the portability requirement on Nov 23, 2003. Also, the portability required AT&T to work on system that integrated with other carries. Other top carriers decided to employ TSI Communication. However, AT&T chose NeuStar before the announcement of other carriers’ decision. This resulted in an integration problem later on when TSI modified its system and NeuStar could no longer communicate with the TSI. The complexity of the project, abandonment of some testing, confirmation of the layoff, outsourcing rumour, the inflexible schedule and complication of portability issues led to the failure of the project. The failure of upgrade project and the problem of NeuStar integrating with other carriers caused the company to lose 50000 customers per week and an estimated loss of revenue of $100 million because of the lack of service. Finally, AT&T undersold itself to Cingular at $41 billion.

By Cheuk Ho