ATT: A Philosophy of Partnership

By Dennis McCafferty  |  Posted 2009-09-29

Since 1885, the two T’s in AT&T have stood for “telephone” and “telegraph,” but those T’s have seemingly merged to become “telecommunications,” representing the company’s involvement in every aspect of modern telecom—from wireless devices to telephones, Internet services and digital television.

These subsectors all move exceedingly fast, with consumer preferences changing as quickly as the next app or gadget is tweeted or blogged about. So, a great idea that takes years to develop may very well be outdated months after it’s brought to market.

To deal with this challenge, AT&T’s strategy is to incorporate its nearly 30,000 IT employees into every aspect of the business process in order to make all aspects of the process move more quickly and achieve the ultimate goal of a successful product launch that brings home a targeted profit.

“We constantly stress that technology is there for the sake of our business goals—as opposed to our business existing for the sake of our technology,” says CIO Thaddeus Arroyo. “If anyone in our company asks our top executives what our IT resources are for, they will say that it’s all about creating business velocity. We must use the technology to transform our business processes in a way that creates market offerings more quickly, allows us to better serve our customers and delivers the ROI that justifies the investment.”

As diverse as its range of products and service lines are, the AT&T philosophy of IT governance can be summed up simply: Make IT part of the business process, not an afterthought. As a result, strategic planning throughout the product cycle is one of continual collaboration, with technology staffers sitting in on business-focused conference calls as the next version of a product like the iPhone is planned and discussed.

IT people are there when phone service departments are trying to come up with better ways to reduce dropped calls. They participate in analyzing the way consumers surf Websites. They also interact with the sales staff at retail locations to see whether there’s a quicker, easier or better way to bring consumers to the point of sale.

“At our retail centers, for example, we’ll have our IT staff watching the interactions to get a sense of what the customers are asking for and what they’d like to see,” Arroyo explains. “Then they’re in on the planning to use available resources to create an experience to match those expectations. That way, they become part of the business strategy.

“This approach has resulted in the installation of kiosks at these retail locations to provide a quicker way for customers to make payments or process warranty returns.” These kiosks have had a remarkable savings and revenue impact, taking in 1.7 million payments in a recent month. This enables in-store reps to focus on sales instead of processing payments and handling administrative duties.

Focusing on Results

Arroyo was named CIO in January 2007, after the finalization of the merger between AT&T, BellSouth and Cingular. Previously, he had been CIO at Cingular Wireless. Since the postmerger period has been further challenged by the recent meltdown of the global economy, overseeing the direction of new IT investments is a weighty responsibility for Arroyo, who says AT&T remains results-focused.

In 2007, the three merged companies oversaw 6,000 IT applications. Today, 1,600 of those applications have been removed from the market, as IT and business departments concluded that the applications were redundant and a drain on revenue.

In AT&T’s work with Apple on the iPhone, the technology organization cooperates with line-of-business managers so both parties can deliver the swiftest market cycle while maintaining the high standards of the product—a strategy for success in difficult times.

“We’ve kept our delivery model consistent through all the various generations of iPhones, which allows us to have a shorter cycle,” Arroyo says. “To do this, we’ve had to extend our IT systems infrastructure to Apple and put a security wrapper on them. We’ve done this several times now, first with the initial iPhone, then with the 3G and, this year, with the 3GS.

“You need to do this in six to nine months. You don’t have years to make this work because it won’t work at all if you take that much time. In good times or bad, we’re always focused on using our IT resources to enhance innovations that produce shorter cycles.”

AT&T’s technology organization oversees hundreds of the company’s business systems, including Internet/intranet infrastructure; front- and back-office applications; and customer billing, service and other tasks. To execute on all this, application development teams that are business-focused—dubbed Consumer IT, Enterprise IT and Corporate Systems—are organized along the major products and services lines.

A technology shared-services team—divided into areas known as IT Operations, IT Architecture and Common Services Integration, Process and Portfolio Management, IT Sourcing and IT Billing Operations—is in place to support the application teams and handle infrastructure operations, architecture and related needs. The infrastructure runs primarily on hardware from Hewlett-Packard, IBM and Sun Microsystems. The core of the applications is Unix-based, operating on x86 servers.

While the infrastructure remains consistent, its impact continues to shape the company in ways considered unimaginable a decade ago. Take telephone service, which used to be monitored on a relatively passive level. If there was a service problem, a red light would flash in a network center, and a technician would be dispatched to fix it.

“Today, we take a more predictive approach,” Arroyo says. “We examine the activity with small transmission outlets, and collect and correlate the data. Our IT people work with our telephone services staff to get a sense—depending on the age of the equipment and the traffic—of which cables will fail, and when. Then we repair them before they break. We’ve patented this technology, actually. This is the kind of [innovation] that has resulted in our company getting more than 100 patents over the past 12 months.”

The same thinking has gone into providing better, user-friendlier services to customers on calling plans. Traditionally, the customer would try out a plan for a few months and then decide whether the plan made sense for the actual minutes used. Now, thanks to the collaboration between IT and business, those customers receive proactive prompts that encourage them to consider alternative plans that are more appropriate for their usage.

“We give customers the ability to make a better decision,” Arroyo says. “We don’t wait for them to come to us, asking if they’re on the right plan. We examine the data, correlate that with the available plans and then present it to them.”

Making Plans

Each year, AT&T goes through a planning process to decide which IT projects to fund and at what level. Spending for approved projects from the most recent years is reviewed, to get a sense of what came in over budget and which projects either made or exceeded spending goals.

“We generally think in terms of three-year windows,” Arroyo says. “We want to review what has happened before to get a better sense of what kind of IT investment we can make in the year ahead. Of those projects, 80 percent are mapped out to be brought to market in 12 months or less, to ensure success.”

Templates that have been successful in the past are then tapped for new product cycles. In other words, nobody from IT gets an “Employee of the Month” award for attempting to build new standards and protocols from scratch for every conceivable project. Instead, employees are rewarded for how adaptive their IT resources, policies and procedures are for the indefinite future.

“We don’t seek to reinvent the wheel with every project,” Arroyo says. “The ‘Is this process reusable for other needs?’ question is part of the review process. IT developments are also reviewed to see if they provide increased automation.

“We want to know, ‘Did the improvement result in 80 of our employees now doing what 100 used to do? If so, how can we extend that to other parts of our business? If not, why hasn’t it?’”

In other words, AT&T takes a business approach to the management of enterprise technology.


Company: AT&T

Headquarters: Dallas

2008 Revenue: $124 billion

Total Employees: 294,600

IT Employees: nearly 30,000

Business: Telecommunications, both wireless and wire line

Business Challenge: To develop new applications that can be brought to market in under a year

Key IT projects: Support for traditional phone-line service, high-speed Internet, digital TV and mobile phone services for the iPhone

IT Infrastructure: Hardware from HP, IBM and Sun. The core of the applications is Unix-based, with x86 servers.

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