Crikey was first with the news last month about the scale of executive
departures from KAZ Group and the huge problems emerging in the
contract with National Australia Bank that is plaguing Telstra after
last year’s ill-considered $350 million takeover.

In an about
face from stated policy, one of the few senior executive figures left
within the KAZ Group empire confirmed recently that the Australian
Administration Services (AAS) business, once prized by KAZ, is
“unlikely to be in the KAZ stable in 12 months time”.

The AAS
business comprises outsourced superannuation administration for some of
Australia’s largest industry funds including the Retail Employees Super
Trust (REST) and CARE Super. Who would have thought that Telstra would
find itself administering super for two million members?

Names
of interested parties that are circling include the US-based
Citistreet, union fund administration behemoth SuperPartners and even
AMP, which sold the AAS business to KAZ for $75 million in 2001.

Amid
all the speculation, an emerging disaster has not been mentioned
publicly – until now. KAZ’s Atune solution development system was meant
to be the all singing all dancing answer to the IT challenges of
superannuation administration in Australia.

KAZ is believed to
have spent more than $20 million developing Atune since 2000 but the
product has been plagued with problems from the outset. Five years
later it is still not complete and is sucking up $5 million a year on
further development when only one external client is running on the
platform.

Our man on the inside claims that management of the
Atune development group has shifted focus to the internal requirements
of the AAS business and away from its initial purpose of a standard
industry package solution.

Initially established with three
industry funds (UniSuper, Seafarers Retirement Fund and the Labour
Union Co-operative Retirement Fund), two of the three departed amidst a
cloud of controversy less than two years into the development of the
project.

UniSuper has since selected KAZ competitor Financial
Synergy and their Acurity solution whilst Seafarers retained their
Bravura Solutions SuperB solution. Add to all of this a less than
favourable technology audit review of Atune by PWC Consulting
(commissioned by the initial industry funds behind KAZ’s back) and it’s
plain to see why the KAZ/Telstra management now appear to want to clear
the decks in terms of the superannuation business and its associated
technology product offerings.

However, given the Government’s
hatred of union-driven industry funds, it would be surprising if
SuperPartners were allowed to increase their stranglehold over super
admin in Australia. With super choice now with us, the last thing the
government wants is the bruvvas locking up the administration of the
industry as it approached the magical $1 trillion mark.