Hawaiian Telcom hires new help

It drops the firm that installed systems that have caused billing and customer service woes

Hawaiian Telcom has signed a $46 million contract aimed at solving customer service and business support problems that have plagued the telephone company since last April.

The deal announced yesterday brings in the global consulting firm Accenture Ltd. to take over key systems from BearingPoint Inc., which is paying Hawaiian Telcom some $80 million to bow out.

Hawaiian Telcom said that roughly half of the $46 million value of the Accenture contract is designated for remediation work, such as improving order-to-billling workflow and enhancing productivity, while the remainder is mostly for ongoing systems maintenance over the 17-month life of the contract.

The Accenture deal comes a day after Hawaiian Telcom entered a settlement agreement with Virginia-based BearingPoint, hired in 2004 to build and operate a new back-office and information technology infrastructure.

BearingPoint will officially hand over the reins to Accenture on May 2.

"Accenture's proven track record and deep industry experience is a welcome and positive development for both customers and employees," said Michael Ruley, Hawaiian Telcom CEO. "Our collaboration with Accenture will drive improved systems functionality, which we will use to improve customer satisfaction, launch aggressive marketing initiatives and reduce operating costs."

Formerly Andersen Consulting, the Bermuda-based company changed its name to Accenture in 2001, billing itself today as a global management consulting, technology services and outsourcing company.

Hawaiian Telcom hired Accenture in August, which eventually led to the current contract.

The Carlyle Group of Washington, D.C., acquired Verizon Communications' Hawaii assets last year for $1.6 billion, and changed the company name from Verizon Hawaii to Hawaiian Telcom.

It hired BearingPoint as early as August 2004, nine months before its acquisition, to build and operate a new back-office and information technology infrastructure so it could operate as a standalone provider of telecommunications services.

But problems followed soon after the April 1 cutover to the new system, with customers complaining of long waits on help lines and double billings.

The company's third-quarter operating expenses of $154.7 million outpaced revenue of $141.7 million.

In the settlement entered on Wednesday, BearingPoint agreed to pay Hawaiian Telcom $52 million as well as dismiss previously submitted invoices of about $30 million.

As part of the agreement, Hawaiian Telcom releases BearingPoint from all liability in connection with acts or omissions prior to the date of the settlement payment.

Hawaiian Telcom's next earnings report -- a year-end report -- is due in late March.

Dan Smith, Hawaiian Telcom's vice president for corporate communications, said customer waits over the phone have been improving, with 79 percent of all calls to the residential call center last month answered in 20 seconds or less.

"The trend started improving in August, with Accenture's help," said Smith. "It was a concerted effort of all three companies. The employees have worked very, very hard."

Customers should not experience any immediate change in their interactions with Hawaiian Telcom during the transition period, but eventually, customer service levels should improve, as well as improved sales and marketing and more efficient business operations.

Accenture is staffing the Honolulu operations with about 70 employees to oversee the systems. A total of 200 at various Accenture locations will work on the Hawaiian Telcom project.

Hawaiian Telcom last year hired about 200 temporary personnel to help improve customer service.

As Accenture's systems development progresses, however, he said, some of those temporary positions should be phased out.

Accenture spokesman Gary Morgenstern said the Hawaiian Telcom contract is among the largest in Hawaii for the company's communications and hi-tech practice.

Hawaiian Telcom has been steadily losing landline customers while gaining DSL users. To stay competitive, the company is also pursuing other offerings, such as video services.

"At the moment, we're entirely focused on this systems development and getting the company stabilized," said Smith. "This announcement is a major milestone, but it's not the end of the road in the transformation of Hawaiian Telcom. Specifically, it allows us to turn our full attention to becoming an efficient, high-performance operation. Now the road map is better defined."