The Client was a $3.3B Specialty Chemical Company with multiple divisions spanning the globe. Approximately 65% of its IT resources were in North America, 28% in Europe, and the remainder was about evenly distributed between Asia Pacific and Latin America. A joint venture spins off the food/gums and resins divisions although IT continued to provide support to the operation.
With about 12,000 employees supported by roughly the same total number of desktops, the Client ran SAP globally (a single instance) out of a central office data center with 12 application servers and 50 development/testing servers. The IT infrastructure also included some 200-300 NT network and application servers. North America had completed “wall-to-wall” installation of SAP: the European IT operations were in the final stages of SAP implementation. A second instance of the software remained in use as a reference source for 400 additional users.
This Project was a fact-based assessment to determine whether and/or where the outsourcing model could be effectively applied by the Client IT organization.
To reach this objective, the project focused on determining the feasibility, advisability, and pros and cons of the various sourcing options available to it. Sourcing alternatives included: status quo, full or partial outsourcing (including determination of which functional areas or processes would be appropriate candidates for outsourcing consideration), and insourcing/shared services.
Scope of Project
The IT Assessment Project encompassed IT operations in North America and Europe including Infrastructure, Decision Support Systems, and Strategic Planning & Business Alignment, within the CIO’s organization. Also included were the Research Center and Manufacturing IT organizations. Functionally, IT included the major functional areas: Operations, Desktop Services, Network and Telecommunications Services, and Application Development and ancillary functions of Information Security, and Architecture and Systems Administration.
The emphasis in this Phase of the project was on data collection and analysis, followed by presentation of the recommendations derived from this activity.
Timing and Resources
TBI staffing on this project consisted of two senior consultants and the project manager full time for five weeks. In addition, the Practice Manager contributed approximately one day per week for the duration of the project.
The resource levels were estimated based on some assumptions regarding the size and scope of the project. For instance, the number of interviews that were scheduled directly affected the consultants’ workload. To effectively cover the scope of affected and appropriate interests, over 50 individuals were included. Similarly, to fully appreciate the scope of IT activities within Client, several IT organizations needed to be researched and understood.
– TBI identified the current services, work flows, SLA’s, capacity and performance levels, the baseline cost, staffing considerations, management controls and customer satisfaction levels. In addition, we identified services & workflow differences, opportunities for cost reduction, staffing gaps, process inefficiencies and opportunities to improve customer satisfaction.
We prepared a base case assessment of the internal option; as opposed to what was available in the vendor market place. We compared the two options with regard to potential cost savings, skills availability, access to technology required for future change and possible impacts on the client’s customer population. In general, we assessed both the benefits and risks of the external vs. the internal options.
– our resultant opportunity and risk matrix showed the client the range of possible financial, personnel and technology benefits of the internal vs. external options. In the end, our client decided that, while outsourcing would probably lower costs significantly, their culture was not ready for the changes it would create. The client then set out to plan an internal transformation to improve efficiency and effectiveness.