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Also Innovators

12

The ups and downs of a contractor

Jean-Paul kept me on at SITA for a couple of months after my contract ran out. I believe he was expecting head office to agree to him employing a pricing manager, and that I would stay to do that job. There was very little chance of either of those ambitions coming to fruition.

During the spring of 1992, whilst still at SITA, I had met two representatives of British Telecommunications (BT). They were on a ‘fishing expedition’ and were seeking information on SITA pricing philosophies. I was happy talking to them. Ben Fursman was a typical — potentially high-flying — young, energetic salesman, from whom I was able to extract market intelligence of interest to SITA. BT had just won a huge contract to provide and operate the communications network for the New South Wales (NSW) Government. It was reputedly worth A$1.5 billion over 10 years, and was a contract that SITA should have known about and bid on. Ben was accompanied by a neat sales support engineer with a closely trimmed beard and the title of systems development manager, Ron Perry, who looked a bit older and was well practiced in telling the BT story. I later learned that Ron often had to be restrained from repeating the same story, such was his enthusiasm for his art. Ron was a communications consultant with an overtly academic approach. The two of them seemed somewhat overwhelmed by the SITA price book — some 200 pages of tabular pricing to provide a network connection between just about any two locations in the world. They asked if BT might use the SITA network for the NSW Government project.

I thought of the lads when I knew I should be looking for another job. I had spoken to Audrey and we were quite keen to look at another overseas posting. We did not want to go back to Singapore, but we were keen to pursue the chance of living and working in Thailand or Vietnam. I rang Ben Fursman and had a positive conversation with him. Ben suggested I call John Poston, the sales director for BT Asia-Pacific.

I met John Poston during a week’s break with Audrey in Singapore, with the excuse that we were attending the Singapore Cricket Club annual February seven-a-side rugby festival. John had not been in Singapore that long and was suffering badly from the heat, and his face was reminiscent of a brilliant, shiny, and uncomfortable lobster. I was able to recommend the doctor who looked after a large number of the expatriate cricket club members who I knew had helped others with a similar problem. Mr Poston told me he would look out for something suitable for me and I left a CV with him. I had a second meeting with him five days later and we discussed terms of possible employment.

The unexpected BT follow-up, 10 days later, occurred through a telephone call from Adrian Coote, the sales director of BT Australasia (BTA). I went into BTA’s George Street office to meet Adrian and took him to the Rugby Club for lunch. He told me that John Poston had suggested I be offered an interim contract in Sydney while BT got to know me and determine a future role in the company. Adrian was a charming Englishman, bespectacled, smart in a double-breasted suit, and oozing confidence. I immediately really liked the guy. Adrian talked to me at great length about opportunities in BTA and the potential for additional business as a result of the NSW Government contract. He told me that several complete departments from BT in the UK, each with a particular skill set, had been offered secondments in Sydney to implement this business; 250 people were in the process of moving from the UK on two-year contracts. It sounded exciting, and Adrian said he had the ear of John Poston with a view to obtaining the overseas posting I was seeking. I signed a contract with Adrian on 23 March and started the next day.

Was it a mistake? The next Monday when I attended the BTA office on George Street, Adrian handed me two packs of business cards that read ‘Chris Yardley, BTA Regional Airline Manager’, and ‘Chris Yardley, BTA Account Manager, TIAS’.

Bugger! The bastards had taken me on to sell against SITA (along with every other network company in the country) for the Travel Industries Automated Systems (TIAS) business. I could see it made sense to BTA, as it knew I had an intimate knowledge of the TIAS deal with SITA — as I was the architect of the deal — and I understood the TIAS deal with Qantas which provided the network for 2,000 of the 4,000 travel agents of its interest.

I asked to be excused. I did not want this. I had always been conscious of salesmen who flitted from one company to another, promoting brand X products one day and brand Y the next. I always found it difficult to respect this style of salesman. I left the office and went into Darling Harbour to sort my mind out.

I did not want this. But I wanted a job. BT had looked like a good fit to get me back into Asia. Adrian Coote was obviously a good guy, and I was impressed to be given business cards on the morning I arrived. The contract was only for six months and if it did not work out I could always go elsewhere.

I returned to George Street and went straight into writing mode to win the TIAS business. This was the first time I had seen the TIAS request for tender. It was huge and reflected the background of Bruce Prior, the TIAS network manager, who had spent many years with SITA in London before his three years at TIAS. Bruce was a friend. I wondered if our friendship would survive the bid and the selling process.

BTA had requested the tender specification, but no one had looked at it with any serious intent. The response to the tender request was due on 7 April. I had two weeks to write a proposal worth … I was not sure of the exact amount, but SITA had been charging over $5 million per year to provide service to half of the TIAS customers, so we were looking at about $10 million per year — $50 million over the five-year contract period.

Confronted by the tender request, I sought to discover, quickly, how BTA worked, and who might be able to offer assistance. The name on everyone’s lips was Charlie Rizzo, the ex-Telecom Australia senior manager who had been the BTA bid manager and salesman to the NSW Government. Of Mediterranean appearance and in his 50s, Charlie told me not to expect any help from him or his project team — they were too busy working on his own project — or Wally Cook, the BTA commercial sales manager: ‘The man is a clown and well named. He is a wally!’ Nor could I expect any help from Lakshman, the Sri Lankan–educated customer services manager. Lakshman and Wally Cook had been brought to BTA by Adrian Coote as yes men. On the positive side, Charlie was complimentary about Adrian Coote, who ‘really understands communications and his way around BT head office in London. He is very ambitious.’ Charlie described Ron Perry as ‘a thinking, constructive systems designer, but subject to the whims of Wally Cook. He has too much to do and too many new salespeople to support.’ Charlie eventually suggested I contact Peter Elsey, the systems development manager in BT Singapore, whose ambition was to sell large projects: ‘Peter is intelligent, keen and helpful.’ He also recommended I seek the good will of Peter Hutton, the BTA managing director, initially on secondment from BT London. His advice was to be positive with BTA when it came to pricing. The world’s telecommunications companies were in the process of changing from nationalised monopolies into aggressive free-market sales companies. Costing was well understood, but pricing was not. This had been a meaningful discussion and I was lucky to have had it. Charlie was so busy within the NSW Government he was very seldom in the home office.

We were still communicating via telex — although in early 1993 we were hearing about the internet — so my first telex was to Peter in Singapore. He responded the next day to tell me that BT did have some experience in the handling of airline-related business, and gave me the names of British Airways and United Airlines as solid users of BT services. That was a start. As ever, the questions from TIAS were related to the airline communications protocols P1024B (IBM 5-bit Baudot code) and P1024C (the 8-bit Sperry–UNIVAC protocol). Any technical information that Peter might send was going to be the meat of any proposal.

On that first day I also telephoned TIAS to let it know that I was looking forward to being involved with it again, and planned to squeeze into the next two weeks the introduction of BTA players to the TIAS team. I arranged separate meetings with the TIAS managers to gain as much exposure as possible for BTA people, particularly Peter Hutton and Adrian Coote. As well as wanting TIAS to get to know BTA, I was in constant in-house meetings with various interested parties in BTA who knew nothing about the airline or travel agent business, but believed they needed to.

After three hectic days in the office, I spent the weekend at home, reading the tender request. The requirements were formidable. It was a wishlist. I started to write the BTA bid on the Tuesday. I sought assistance from Wally Cook in finding the boiler-plate technical data and information to give substance to what we would be claiming as competencies in the submission. As ever, he referred me to Ron Perry. I also needed to design and find a printer for the (inevitable) three-ring binder that would hold the proposal. I would have expected BTA to have suppliers organised, but it did not.

How were we going to price a managed network for TIAS? John Poston’s acumen in recommending that I be employed by BTA now became apparent. BTA did not have a clue. I knew what SITA was charging. I had derived the SITA algorithm with Bruce Prior four years previously. That agreement had been significant for SITA, as it was its first major contract without a character count and charge for each character passing through the network. Bruce and I had agreed upon a monthly connection fee of A$80 per travel agent, with an inbuilt discount structure.

Number of travel agent connections

Monthly charge (AU$)

1–500

80.00

501–1,000

77.50

1,001–1,500

75.00

1,501­–2,500

72.50

Note: The scale of charges agreed by SITA and SCDS — the more travel agents connected to the network, the cheaper the connection fee.

We had not gone any further than this, as TIAS was only buying the Southern Cross Distribution Systems (Galileo) network connections from SITA, with a target of 2,000 travel agent connections.

The Galileo agent paid TIAS the $80 fee, plus the appropriate Telecom Australia fee for the use of the Telecom Australia network to get data to and from the TIAS network. This kept the TIAS pricing simple. It did have a small margin with the higher number of connections. TIAS made its money from the airlines as a part of the booking fee for every airline sector. When I looked at BTA pricing, I found that the BTA pricing algorithms were simpler and were related to the network transmission protocols used, with hefty connection charges. I spoke to the financial people at BTA and, as Charlie Rizzo had warned, they were looking to me to tell them what we might charge — they would then apply costing to determine if there was a profit to be made. There is that word: ‘profit’. The SITA ethos was not-for-profit. How could I justify any price that was comparable to the SITA price to BTA, who were in business to make a profit? I had long discussions with Adrian Coote and the financial people, all of which were inconclusive. As the bid date hastened nearer, Adrian asked me to state the per agent fee that would win BTA the business. I recommended A$65 per month. The financial department went away to weave its magic with that number. It was acceptable to them, provided I obtain sign-offs for the technical and engineering aspects of the proposal. We submitted our bid, on time, on 7 April. Bruce Prior told me that BTA was the surprise bidder. TIAS had expected SITA to bid, of course, and Bruce was looking forward to seeing its price. He expected bids from Telecom Australia, Optus, Telecom New Zealand, IBM Global Services, and Electronic Data Systems. He also pondered an approach from another airline-related consortium that was probably headed by the Amadeus CRS.

The following week, Adrian Coote sat me down in his office to ask what other projects I would be working on with BTA. I had not given it much thought, and he surprised me by giving me another tender request, this time from Air New Zealand. Tom Ryan, the Air New Zealand CIO, had written to BT in London asking for a proposal for a complete outsourcing of the airline’s computer centre and network, worldwide. That was interesting, and was a sign of the times. I wondered if SITA knew Mr Ryan was making such enquiries. Expecting to pursue this opportunity, I learned that BT had a sales division, Syncordia Global Services, devoted to outsource business. I spoke to Tom Ryan and arranged to go to Auckland to talk to him. At the same time, I would call on the Air New Zealand TIAS representative and the TIAS managers in New Zealand.

I spent a lot of time with Irene Woods, the BTA financial manager. She was most concerned about the bid price we had submitted to TIAS. I did not blame her, as I had struggled to justify anything that was comparable to SITA’s not-for-profit pricing to BTA. As I was to learn, the NSW Government contract had been predicated upon similar thinking: ‘What price will win the business?’ In the case of the NSW Government, working with the finance minister, the bid was an unsubstantiated offer to provide the same services as the existing suppliers at a discount of 30 per cent. The NSW Government had made a politically motivated decision to outsource services. The big problem that Charlie Rizzo was facing was antagonism from those government departments who had not been consulted about the telecommunications outsource contract. They were obstructing Rizzo’s team as they attempted to determine what it was BTA had been contracted to deliver. Another obstacle was that most departments had numerous contracts with their suppliers, with no obvious and significant cut-off dates that BTA might target to provide the alternative service. BTA, therefore, had no firm project plan to achieve the core network for government. Yet, when I went through my suggested TIAS pricing with Peter Hutton, Adrian Coote, Wally Cook, and Irene Woods, they told me not to worry too much about pricing, because the NSW Government X.25 network, which was being paid for by the NSW Government, would be available for use by TIAS and they presumed that travel agencies would be congregated in the same urban and rural locations as government offices. Supposition upon supposition. I had my doubts, and so did Wally Cook. Irene recommended that we submit a supplementary proposal requesting that the pricing be regarded as negotiable. She did not win this battle.

I had a sales plan to follow. I needed to make contact with the airline directors of TIAS to introduce BTA as a potential provider. Paul Perrottet at Australian Airlines and Geoff Dixon at Ansett Australia Airlines both claimed to have no interest in the technical aspects of the network, so long as a move to BTA would not prejudice any marketing initiatives TIAS might adopt. We tried to assuage any doubts they might have, but my own doubts were growing. After the meeting with Geoff Dixon in Melbourne, Wally Cook told me that Mr Dixon (the same Geoff Dixon who was to enjoy success for several years as the CEO of Qantas) was ineffective.

We answered two sets of fairly basic questions from Bryan Wishart and Bruce Prior of TIAS, which led us to believe that they were trying to understand our bid. TIAS asked for a formal presentation of our proposal. I thought it would be a good idea to ask someone from head office to make a video. Adrian Coote was optimistic, and recommended I talk to the office of Alfred T. Mockett, managing director of the business communications group. I called Mr Mockett’s office and was surprised when his secretary put me straight through. After a briefing, he was enthusiastic to participate. All he required from me was a script. He would arrange the studio recording and getting the video to Sydney. It was an excellent video, which I had the chance to view the day before we were to use it. He had followed my script exactly. In the video, Mr Mockett introduced himself, welcomed the TIAS management team and our presentation team by name. In my script, I had written:

‘BTA anticipates a lively question and answer session, and knows that TIAS will not hesitate to ask the hardest of questions. We thank you for your interest and please be assured that I am personally involved in our bid and look forward to meeting you on the earliest occasion I can get to Sydney.’

I delayed this wrap-up until the conclusion of the presentation. It worked perfectly. Richie Hall was delighted.

When we met for the first time, an outside consultant was assisting TIAS with the request for tender. Virgil Iliescu, a very precise engineer, was driving the request for tender and analysing supplier responses. The presentation itself went well enough. We managed to answer the queries thrown at us. TIAS also presented a written questionnaire of 23 specific areas of interest, which was predictable and a bit dull, until Adrian Coote unexpectedly jumped in.

‘It seems to me that we are agreeing that we might be able to do business on a technical level. Your questions do not test us technically, but you do not know BT and our competences. I propose we initiate a two-level ongoing dialogue. One morning a week, for as long as necessary, we shall attend TIAS to introduce our management team and their objectives, and Lakshman will arrange for a technical discussion for your technicians every Friday afternoon. We’ll buy them a beer afterwards. How does that sound? We will call it a “quality cell”. In return, TIAS will make the time, through a business needs workshop, to ensure BTA technicians know every facet of the TIAS aspirations.’

To my mind this was a perfect proposal. Ron Perry told me Adrian had done the same when BTA presented to the NSW Government, and it had certainly helped.

We had 23 questions to answer to the appropriate BTA people. Question 23 asked BTA to examine its bid price, and to detail its components to see if the price might be honed. We amended our sales plan as a result of the current situation as we saw it, and, while maintaining supervision of our response, I took responsibility to address the technical matters with Bryan Wishart. He was an unknown influence. Mr Mockett’s video was shown around BTA. It was a hit in-house. I wrote to Mr Mockett to explain that the video had been well received. He replied, committing to visit TIAS when he got to Sydney and asking I keep him updated.

The next week TIAS extended its tender and asked leading questions about the pricing of circuits at 4,800/9,600 bits per second, twice the speeds it had originally requested. It also required that we sign a non-disclosure agreement, implying that it had other issues it wished to discuss. We were also asked if we could extend our services into the Pacific, including the Cook Islands. These were positives from a sales perspective, and we were encouraged.

In early June, Adrian Coote announced that he was leaving BT. I tried to minimise any effect on TIAS negotiations, but it was difficult. He had created a good impression. Another effect of Adrian’s departure was that Ron Perry and I lost any support we might have anticipated from Lakshman, who should have been orchestrating the ‘quality cell’ process with TIAS.

On 7 June, Ron Perry and I began to conduct the ‘quality cell’ and ‘business needs workshops’, which introduced us to another, specialist level of TIAS management. Later that same week, we conducted a significant demonstration for Bruce Prior and three service desk employees from the network control centre that BTA was constructing for the NSW Government. Bruce Prior requested that he be able to visit with some colleagues to discuss their Pacific service ambitions. I was asked to write a technical paper discussing the migration of the Fantasia and Galileo networks. With the invaluable help of Peter Elsey, Ron Perry and I were able to sustain enough material to visit TIAS on a daily basis during June and July.

On 10 August, Richie Hall took me into his office at Bondi Junction to tell me that his technical review team had recommended the BTA bid, and that a decision was anticipated from the TIAS board meeting of 12 August. The technical team had access to pricing algorithms, so I was most encouraged. Not so BTA, who went into panic mode. I was obliged to explain the TIAS financials in detail to many accountants.

On tenterhooks, I called Bryan Wishart the afternoon of 12 August. No decision yet. The Air New Zealand director had not been able to fly out of Auckland that morning due to fog. The next board meeting was scheduled in three weeks time, on 2 September. The response from that later meeting was negative. Richard Hall would tell me no more, but did invite me to visit him after the weekend.

On 6 September I visited TIAS to meet with Richard Hall, who told me that the TIAS board had decided to continue to use SITA to provide its total network. Richard was at great pains to remind me that TIAS was owned by the three airlines — Qantas, Ansett Airlines, and Air New Zealand — who also owned SITA. Qantas provided the regional director on the SITA board. He was at pains to thank BTA for providing stiff competition during the decision process, and rubbed salt into the wounds by saying: ‘You did good a job too, Chris, representing BTA to convince the airlines to revoke their previous decisions.’

The decision was a blow. I had several other bits and pieces of potential business to pursue, such as Air New Zealand outsourcing; the Queensland Government travel network; Cardinal Network of Christchurch, New Zealand; and the Harvey World Travel network, with Doug Norton still rocking the boat. BTA instructed me to report to Kevin Draper, who had been recently recruited from London. I assumed a new role as travel and transport manager, and wrote a comprehensive market analysis of the sector for him.

I met with Kevin and he complimented me on the work I was doing, but two days later BTA told me it would not be renewing my contract. My six-month contract had run for six months and three days. It had been a classic win or lose situation. Had we won the TIAS business, I would have been paid a huge commission and been a star for a while. But would BTA have ever been able to handle the 4,000 connection network transfer? Would BTA have been able to provide the satellite network control centre from its regional centre? I have grave doubts to this day.

BTA was not able to fulfil its obligations to the NSW Government, and arbitration of the failed contract went to court, with both sides seeking A$1.5 billion recompense from the other.


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