APPENDIX B: CASE STUDY PROFILES
Please click on the following case pseudonym to see full entry:
| UTILITY6 | UTILITY7 | UTILITY8 |
| COMPANY PSUDONYN AND INDUSTRY (n=76) | PARTICIPANTS(n=271) | SOURCING DECISION(S) (n=116) | DECISION SPONSOR | DECISION PROCESS | CONTRACT DURATION | CONTRACT TYPE | DECISION YEAR | SOURCING EXPECT-ATION(s) | EXPECTATION(s) ACHIEVED? |
|---|---|---|---|---|---|---|---|---|---|
| 1.BANK1 U.S. Commercial Bank |
1. VP of IS 2. Financial Manager 3. Manager of IS Group 4. Outsourcing Consultant |
1.Total Outsourcing | Senior Manager | 1 External Bid | 10 years | Detailed | 1990 | 15-18% cost savings expected | YES , achieved 15% anticipated savings as of 1994 |
| 2. DIVERSE1 U.S. Diversified Services | 5. Manager of IS 6. VP of Operations 7. Vendor Account Manager 8. VP of Computer Utility 9. Outsourcing Consultant |
2.(a) Total Insourcing 3.(b) Total Outsourcing |
(a) IT Manager (b) Senior Manager |
(a) No Formal Bid Process (b) 1 External Bid |
(a) N/A (b) 10 years |
(a) N/A (b) Loose |
(a) 1988 (b) 1988 |
(a) Senior managers wanted cost savings (b) Cost savings of 20% promised to shareholders |
(a) NO cost improvements were made (b) NO , customer threatened to sue vendor |
| 3. METAL U.S. Metals | 10. Manager of IS 11. Manager of Systems Development 12. Manager of Purchasing 13. Vendor Account Manager 14. Outsourcing Consultant | 4. Total Outsourcing | IT Manager | 2 External Bids | 10 years | Detailed, with major loopholes | 1990 | Wanted to avoid investment to overhaul poor IS function; 16% savings estimated | MIXED: new capabilities were brought in, but at a higher than anticipated price |
| 4. TRANS U.S. Trans-portation | 15. Chief Financial Officer | 5. Total Outsourcing | Senior Manager | 1 External Bid | 10 years | Detailed | 1991 | Company in bankruptcy and needed cash; 20% cost savings estimated | MIXED: cash was given upfront, but no clear indication of savings |
| 5. MINE US. Mining | 16. Controller 17. Vendor Account Manager | 6. Total Outsourcing | Senior Manager | 1 External Bid | 10 years | Detailed, with loopholes | 1991 | Controller wanted cost savings and to dramatically improve service | MIXED: vendor runs with a leaner staff to deliver savings, but sole monopoly power yields high-priced bids on new work |
| 6. AERO1 U.S. Aerospace | 18. Director of Processes and Tools | 7. Total Outsourcing | Senior Manager | 1 External Bid | 10 years | Detailed | 1993 | Severe downturn in defence industry caused corporate-wide cuts; company needed cash | MIXED: received cash upfront, but some parts of the contract for strategic applications cancelled within first year; infrastructure outsourcing runs well |
| 7. CHEM1 U.S. Chemicals | 19. Manager of DP | 8.(a) Total Outsourcing 9. (b) Total Insourcing (Return In-house) | (a) Senior Manager | (a) No Formal Bid Process (b) No Formal Bid Process | (a) 7 years (b) indefinitely | (a) Loose (b) N/A | (a) 1984 (b) 1988 | (a) After a leveraged buyout, outsourced to avoid building internal IS department; expected good service at a reasonable cost
(b) Savings anticipated from terminating contract | (a) NO, terminated contract early (b) YES, savings chieved |
| 8. RUBBER U.S. Rubber & Plastics | 20. VP of IS | 10. (a) Total Outsourcing 11.(b) Total Insourcing (Return In-house) | (a) Senior Manager (b) IT Manager | (a) No Formal Bid Process (b) No Formal Bid Process | (a) 7 years (b) N/A | (a) Loose (b) N/A | (a) 1987 (b) 1991 | (a)Savings anticipated but not quantified (b)Savings anticipated, not quantified | (a) NO, IT costs rose to 4% of sales; contract terminated early (b) YES, costs dropped to 1% of sales |
| 9. RETAIL1 U.K. Clothing & Housewares Retailer | 21. Logistics Director 22. Contract Manager 23. Vendor Account Manager 24. Branch Manager | 12. Total Outsourcing | IT Managers | 4 External Bids | 10.5 years | Mixed, with risk reward element | 1993 | 25% savings anticipated; Viewed IT as a non-core activity to be outsourced; sought business value from supplier viewed as having core capabilities in IT | YES, Cost savings achieved on base contract. Two further reengineering contract signed in 1994/95. Vendor experienced difficulties in making money on business oriented projects; client reluctance to spend any money on IT |
| 10. PETRO1 European Oil | 25. IT Manager 26. In-house Consultant 27. In-house Consultant 28. Vendor Account Manager 29. Contract Manager | 13. (a) Selective: Diverse Services 14. (b) Selective: Accounting Services 15.(c) Total Outsourcing for datacenter operations, telecom and WANs, and distributed and leading edge systems, scientific applications | (a) IT Managers (b) Senior Managers (c) Senior & IT Managers (including Board) | (a) 4 External Bids (b) 3 External Bids (c) 6 External Bids | (a) 3 years (b) 4 years (c) 5 years | (a) Detailed (b) Detailed (c) MIXED: Three umbrella contracts loosely defined, but detailed in decentralized regions | (a) 1988-1990 (b) 1991 (c) 1993 | (a) 15-20% cost savings (b) 20% cost savings and ability to refocus in-house staff | (a) YES (b) YES, contract renewed (c) YES, Regular cost savings on base services but most savings achieved before outsourcing. Little innovation or added value, but IT function more business focused. |
| 11. ELECTRIC1 European Electronics | 30. IS Director 31. Vendor IS Manager 32. Senior Manager 33. Marketing Manager | 16. (a)Selective: Software Development & Support 17. (b) Total Outsourcing | (a) Senior & IT Managers (b) Senior & IT Managers | (a) No Formal Bid Process (b) No Formal Bid Process | (a) 5 years (b) annually renewable | (a) Mixed (b) Strategic Alliance | (a) 1989 (b) 1991 | (a & b) No cost savings estimated, desire to create variable IT costs | (a) YES, some cost savings achieved (b) YES, some savings achieved. Subsequently renewed. |
| 12. INSURE2 U.K. Insurance | 34. IS Director 35. Vendor Account Manager 36. Senior Manager 37. Consultant | 18.(a) Total Outsourcing 19.(b)Selective:Systems Maintenance 20. (c) Total Insourcing | (a) Senior & IT Managers (b) Senior & IT Managers (c) Senior & IT | (a) Compared 1 external with internal bid (b) Compared 1 external with internal bid (c) Compared 2 external with internal bid | (a) 1 year (b) 1 year (c) 1 year | (a) Detailed (b) Detailed (c) N/A | (a) 1990 (b) 1991 (c) 1993 | (a) No cost savings estimated; business start-up situation (b) 25-30% cost savings expected (c) 30% cost savings expected | (a) NO, difficulties with packaged software brought in from US (b) YES, cost savings achieved (c) YES, cost saving achieved |
| 13. PSB1 U.K. Inland Revenue Service | 38. IS Director 39. Line Manager 40. IS Operation Manager 41. Outsourcing Consultant | 21. Total Outsourcing | Government, Ministers & IT Manager | 6 External Bids | 10 years | Mixed | 1994 | £225 million savings expected over 10 years (20%) Also improvement in develop-ment speed; rapid access to new skills/IT; better career opportunities for IT staff. | YES, £22 million per year savings on base contract. But 60% price increase (£600million) expected over total contract, due to new technologies, time pressures, new requirements. Staff did get new opportunities. |
| 14. CHEM2 U.S. Chemicals | 42. Manager of IS 43. Manager of DP 44. Network Services Supervisor | 22. Total Insourcing | IT Manager | 3 External Bids | N/A | N/A | 1991 | No cost savings estimated--bids used to convince management of insourcing | NO improvements made |
| 15. DIVERSE2 U.S. Diversified Services | 45. Director of Advanced Technology | 23. Total Insourcing | IT Manager | No Formal Bid Process | N/A | N/A | 1991 | No cost savings estimated, IT managers wrote white paper against outsourcing | NO improvements made until senior management subsequently outsourced applications |
| 16. PETRO2 U.S. Petroleum Refining | 46. VP of IS 47. Director of Systems Coordination 48.Director of Technical Support 49. Director ,World Communications | 24. Total Insourcing | Senior Manager | No Formal Bid Process | N/A | N/A | 1988 | Supplier tried to convince senior management to outsource, but CEO viewed IT as strategic so rejected bid | YES, IS department viewed as successful, even sell IS services externally |
| 17. PETRO3 U.S. Petroleum Refining | 50. Corporate Manager of Planning 51. Division Manager 52. Corporate Manager of Technology 53. Manager of Software Strategies 54. Manager of Computing Strategies | 25. Total Insourcing | Senior Manager | Compared 2 external with internal bid | 5 years | N/A | 1991 | 43% cost savings expected | YES, cost savings achieved within 5 years, but some service levels declined |
| 18. PETRO4 U.S. Petroleum Refining | 55. Assistant Treasurer 56. Director of IS 57. Manager of Technical Support | 26. Total Insourcing | IT Manager | 2 External Bids | open time limit | N/A | 1990 | No cost savings estimated, only bid successful IT activities, not troubled ones to bias results | NO, costs and services remained the same after outsourcing evaluation |
| 19. RETAIL2 U.S. Shoe Apparel | 58. VP of IS 59. Director of IS Administration 60. Insourcing Consultant | 27. Total Insourcing | IT Manager | No Formal Bid Process | N/A | N/A | 1988 | 54% cost savings estimated | YES, cost savings achieved within 4 years, but some services deteriorated |
| 20. UNIVERSITY U.S. Public University | 61. Chief Information Officer 62. Member, Interfaculty Council | 28. Total Insourcing | IT Manager | Compare 1 external with internal bid | N/A | N/A | 1992 | 20% cost savings estimated | YES, cost savings achieved within 1 year and some services improved |
| 21. FOOD1 U.S. Food Manufacturer | 63. Data Center Director 64. Insourcing Consultant | 29. Total Insourcing | Senior Manager | Compare 1 external with internal bid | N/A | N/A | 1988 | 45% cost savings estimated | YES, cost savings achieved within 3 years, but some services deteriorated |
| 22. TCOM U.S. Telecom-munications | 65. Manager of IS 66. Internal Lawyer 67. Previous Manager of IS 68. Data Center Manager 69. Facilities Management Director 70. Chair, RPF Team 71. Chair, Internal Bid Team | 30. Total Insourcing | Senior Manager | Compare 2 external with internal bid | 5 years | N/A | 1991 | 46% cost savings estimated | YES, cost savings achieved within 2 years, but some services deteriorated |
| 23. UTILITY1 U.K. Water Company | 72. Business Manager 73. IS Director 74. Manager of Operations 75. Vendor Account Manager | 31. Selective Outsourcing:Customer Billing System | IT Manager | 2 External Bids | 5 years | Detailed | 1991 | 20% cost savings expected | YES, cost savings achieved |
| 24. PETRO5 U.S. Petroleum Refining | 76. Director of IS 77. Controller 78. Manager of Network Services 79. Data Center Manager 80. Supervisor of Tech Support 81. Manager of Applications | 32. Selective Outsourcing: Data Center | IT Manager | 2 External Bids | 5 years | Detailed | 1991 | 16% cost savings estimated; also wanted to avoid cost of relocating data center due to headquarters move | UNABLE TO DETERMINE because contacts have left the company |
| 25. RETAIL3 U.K. Retail and Distribution | 82. Principal, IT Consultant 83. Group IS Director 84. Vendor Account Manager 85. Business Manager | 33.(a) Selective Outsourcing: Corporate Telecom. 34.(b) Selective Outsourcing: Telecom. | (a) IT Managers (b) IT Managers | (a) 3 External Bids (b) 3 External Bids | (a) 3 years (b) 2.5 years | (a) Standard (b) Detailed | (a) 1992 (b) 1993 | (a) 20% cost savings estimated; access to skills. (b) 30% cost savings; access to skills. | (a) YES Some problems with service levels (b) YES Some problems with service levels. On renewal, both contracts given to second supplier only. |
| 26. CHEM3 U.K. Chemicals Manufacturer | 86. Group IT Manager 87. Manager of Applications Development 88. Manager of European and UK Operations 89. Manager of IT Development | 35. (a)Selective: System Support 36. (b)Selective: Development & Support 37. (c)Selective: Development & Support | (a) Senior & IT Managers (b) Senior & IT Managers (c) Senior & IT Managers | (a) 3 External Bids (b) No Formal Bid Process (c) 4 External Bids | (a) 2 years (b) 2 years (c) 3 years | (a) Detailed (b) Detailed (c) Detailed | (a) 1985 (b) 1991 (c) 1992 | (a) 40% cost savings estimated (b) 30% cost savings estimated (c) 20% cost savings estimated | (a) YES, 50% over 8 years (b) YES, but more like 20% savings achieved (c) YES, Most. |
| 27. FOOD2 U.K Food Manufacturer | 90. Manager of IT Services 91. Managing Director of Group Services 92.Consultant (Vendor) 93. Senior Manager | 38. (a) Total Insourcing 39. (b) Selective: Factory Software Development | (a) IT Manager (b) Senior & IT Managers | (a) 2 External Bids (b) 3 External Bids | (a) N/A (b) 2.5 years | (a) N/A (b) Detailed | (a) 1990 (b) 1991 | (a) 20-30% cost savings estimated (b) 25% cost savings estimated | (a) YES, cost savings achieved (b) NO, major problems with software development |
| 28. GOODS U.K. Consumer Product Manufacturer | 94. Director of IS 95. Manager of Operations 96. Manager of Operations 97. Vendor Account Manager | 40. (a) Total Outsourcing 41. (b)Selective: Data Center | (a) Senior& IT Managers (b) Senior & IT Managers | (a) 5 External Bids (b) 4 External Bids | (a) 5 years, did not renew (b) 3 years | (a) Detailed with major loopholes (b) Detailed | (a) 1985 (b) 1988 | (a) 15% cost savings estimated (b) 20% cost savings estimated | (a) NO, financial estimates incorrect; no original benchmark of internal costs (b) YES, cost savings achieved |
| 29. BANK2 U.S. Commercial Bank | 98. Contract Manager 99. Vendor Consultant 100. Senior Business Manager 101. Data Center Manager | 42. Selective:Data Centers | Senior Manager | 5 External Bids | 5 years | Detailed | 1992 | 25% cost savings estimated | YES, cost savings achieved |
| 30. BANK3 U.K. Commercial Bank | 102. Managing Director of IT 103. Manager of IT Operations 104. Vendor Account Manager 105. Senior Manager | 43. (a)Selective:Systems Support 44. (b)Selective:Systems Support & Enhancement | (a) Senior & IT Managers (b) Senior & IT Managers | (a) 4 External Bids (b) 4 External Bids | (a) 3 years (b) 2 years | (a) Detailed (b) Detailed | (a) 1991 (b) 1992 | (a) 15-20% cost savings estimated (b) 20% cost savings estimated | (a) YES, cost savings achieved (b) YES, cost savings achieved |
| 31. GLASS U.K. Glass and Plastics Manufacturer | 106. Group IS Director 107. Vendor Account Manager 108. Manager of IS | 45. Selective: Data Center and Systems Development | Senior & IT Managers | 5 External Bids | 2 years + renewed for 3 years | Mixed | 1992 | 24% cost savings estimated; new client server development sought | YES, contract successful and renewed for three years. |
| 32. BREWER U.K. Brewing & Distribution | 109. Director of Systems Services 110. Vendor Director 111. Contract Manager 112. Production Manager | 46. Selective: Central Systems Development & Support | IT Managers | 4 External Bids | 5 years | Mixed | 1993 | Break even over 5 years; achieve jobs for redundant IT staff | MIXED: Costs rose due to poor pricing of future work, but IT staff successfully transitioned. |
| 33. RETAIL4 U.K. Clothing & Food Retailer | 113. Operating Services Manager 114. Senior Business Manager 115. Senior Business Manager 116. Vendor Account Manager 117. Manager of IT | 47. (a)Selective: Data Center 48. (b)Selective: PC Maintenance 49. (c)Selective:Mainframe Maintenance | (a)IT Managers (b) IT Managers (c) IT Managers | (a) 3 External Bids (b) 4 External Bids (c) 2 External Bids | (a) 3 years (b) 3 years (c) 3 years | (a) Detailed (b) Detailed (c) Detailed | (a) 1988 (b) 1988 (c) 1990 | (a) Sought maintenance of legacy service while in-house staff focused on development. (b) 15% cost savings estimated (c) 20% cost savings estimated | (a) YES, successful (b) YES, achieved cost savings (c) YES, achieved cost savings |
| 34. FOOD3 U.K. Food Manufacturer | 118. Manager of IS 119. Manager of Software Development 120. Manager of Systems Management 121. Vendor Account Manager | 50. (a)Selective:Factory Software Development 51. (b)Selective:Data Center | (a) Senior Manager (b) IT Manager | (a) 4 External Bids (b) 5 External Bids | (a) 2 years (b) 3 years | (a) Mixed (b) Detailed | (a) 1988 (b) 1992 | (a) Sought low-cost development of new software (b) 30-33% cost savings estimated | (a) NO, Costs doubled. Future development insourced. (b) YES Contract renewed on similar basis. |
| 35. UTILITY2U.K. Electricity Supply | 122. Manager of IT Operations 123. Contract Manager 124. Services Manager | 52. Selective:Distributed PC Networks & UNIX Servers | Senior Manager | 6 External Bids | 2 years | Detailed | 1992 | 30% cost savings estimated, and access to skills | YES, expectations achieved |
| 36. PSB2 U.K. Public Health Authority | 125. Director of IS 126. IS Staff member 127. IS staff member 128. Contract Manager 129. Regional Manager | 53. Selective:Data Center and Software Packages | IT Manager | 4 External bids compared with internal bid | 5 years | Detailed | 1991 | 20-25% cost savings estimated; outsourced mainframe until transitioned to smaller platforms | YES - objectives achieved |
| 37. PSB3 U.K. County Council | 130. Manager of IS 131. Department Manager 132. Vendor Consultant 133. Outsourcing Consultant 134. Contract Manager | 54. (a)Selective: Data Center & Telecom. 55. (b)Selective:Office Systems Support | (a) IT, Finance & Business Service Managers (b) IT, Finance & Business Service Managers | (a) 6 External Bids (b) 1 External Bid | (a) 5 years (b) 4 years | (a) Detailed (b) Detailed | (a) 1991 (b) 1992 | (a) 20% cost savings estimated; culture change in in-house IT function sought (b) 17% cost savings estimated | (a) YES, cost savings achieved (b) YES, cost savings achieved |
| 38. PSB4 U.K. Broadcasting Corporation | 135. Director of IS 136. Contract Manager 137. Production Manager | 56.(a) Total Insourcing 57. (b)Selective:Data Center | (a) Senior & IT Managers (b) IT Manager | (a) 1 external compared with internal (b) 5 External Bids | (a) N/A(b) 7 years | (a) N/A (b) Detailed | (a) 1988 (b) 1992 | (a) 25% cost savings estimated (b) 35% cost savings estimated | (a) YES, cost savings achieved (b) YES, cost savings achieved |
| 39. AVIATION U.K. Aviation Authority | 138. Manager--Internal IS Consulting Group 139. Contract Manager 140. Vendor Consultant 141. Vendor Manager | 58. (a)Selective: Payroll&Fin-ancial Systems 59. (b)Selective: PCs and Networks 60. (c)Selective: Financial Packages | (a) Senior Manager (b) IT Manager (c) IT Manager | (a) 2 External Bids (b) 3 External Bids (c) 1 External Bid | (a) 5 years (b) 4 years (c) 5 years | (a) Standard (b) Detailed (c) Detailed | (a) 1988 (b) 1989 (c) 1990 | (a) 15% cost savings estimated (b) Some cost savings estimated (c) Some cost savings estimated | (a) NO, cost savings not achieved (b) NO, cost savings not achieved (c) NO, cost savings not achieved |
| 40. UTILITY3 U.K. Water Company | 142. Director of IS 143. Vendor Representative 144. Contract Manager 145. Senior Manager | 61. Selective: Data Center | Senior Managers | 3 External Bids | 3 years | Detailed | 1994 | 15-20% cost savings estimated | YES, cost savings achieved |
| 41. PSB5 Australian State Government | 146. VP of Operations 147. Contract Manager148. Consultant | 62. (a) Total Outsourcing 63. (b) Economic Development | (a) Senior Government Officials (b) Senior Government Officials | (a) 2 External Bids (b) 2 External Bids | (a) 9 years (b) 9 years | (a) Detailed (b) Strategic Partnership | (a) 1995 (b) 1995 | (a) 10-15% cost savings estimated (b) Yearly targets for revenue generation | (a) MIXED: better service; centralized government claims lower costs, decentralized government claims higher costs (b) YES |
| 42. CHEM4 U.S. Chemicals Manufacturer | 149. Global Alliance Manager 150. Global Planning Manager | 64 (a). Total Outsourcing of Infrastructure 65. (b) Selective Outsourcing of Applications | (a) Senior & IT Manager (b) Senior & IT Manager | (a) 3 External Bids (b) 3 External Bids | (a) 10 years (b) 10 years | (a) Detailed (a) Detailed | (a) 1997 (a) 1997 | (a) 7-10% cost savings estimated (b) 7 -10% cost savings estimated | (a) TOO EARLY TO TELL (b) TOO EARLY TO TELL |
| 43. PSB6 U.S. County Government | 151. Union Head 152. 3 IT Staff Employees 153. County Legislator 154. County Consultant 155. County Attorney | 66.(a) Total Outsourcing 67.(b) Total Insourcing | (a) Senior County Managers (b) US Judge | (a) 1 External Bid (b) No Formal Bid Process | (a) 10 years (b) N/A | (b) Detailed (b) N/A | (a) 1996 (b) 1997 | (a) 10-15% cost savings achieved (b) no cost savings estimated; resume status quo | (a) NO, contract terminated after 1 year (b)TOO EARLY TO TELL |
| 44. PSB7 U.S. IRS | 156. CIO 157. Auditor from GAO 158. Deputy Chief Compliance Officer | 68.(a) Selective; development of electronic filing system 69.(b) Selective; development of imaging system to process paper returns | (a) Senior and IT managers (b) Senior and IT managers | (a) No Formal Bid Process (b) No Formal Bid Process | (a) Not available (b) Original contract bought out by second supplier | (a) Loose (b) Loose | (a) early 1990s (b) mid-1990s | (a)expected development of efficient, high-service system (b) expected development of efficient, high-service system | (a) NO, contract terminated after $17 million spent (b) NO, contract terminated after spending $285 million |
| 45. PSB8 US Research Site | 159. Chair of Outsourcing/Insourcing Task Force 160. Member of Outsourcing/Insourcing Task Force 161. IT Staff in Decentralized Service Center | 70. Total Insourcing | IT Managers | No Formal Bid Process, informal bids from suppliers indicated they could not reduce IT costs and still meet high service level requirements | N/A | N/A | 1996 | Sought to reduce IT budget; Current IT costs 20% of total operating budget | UNABLE TO DETERMINE if continued insourcing found improvements |
| 46. BANK4 European Bank | 162. Prior IT Supplier Account Executive | 71. Total Outsourcing | Senior Managers (including Board) | No Formal Bid Process | 25 years | Loose contract based on false notions of partnerships | 1995 | Cost savings and long-term business benefits anticipated. | NO, significantly reduced scope and length of contract after 1 year; Poor supplier staffing a main cause |
| 47. AERO2 UK Aerospace | 163. Vice President 164. General Contract Manager 165. Divisional Contract Manager 166. Divisional Contract Manager 167. Divisional Contract Manager 168. Divisional Contract Manager | 72. Total Outsourcing | Senior & IT Managers | Compared 3 external bids with internal bid | 10 years | Detailed | 1994 | 10-30% cost savings estimated | YES, cost savings on base services contracts. But IT budget has increased from £100 million to over £200 million in 4 years. New technologies being developed. |
| 48. AERO3 US Aerospace | 169. Ex-Account Executive 170. Vice President | 73. Total Outsourcing, Primarily Infrastructure | Senior Managers | No Formal Bid Process | 10 Years | Detailed | 1992 | 15-20% cost savings estimated | YES, previous IT function was highly centralized which facilitated transition |
| 49. RETAIL5 UK Retail | 171. IT Manager 172. Vendor Manager 173. Consultant | 74. Total Outsourcing - IT, finance and accounting | Senior Managers (including CEO and Board) | 1 External Bid (No open tendering) | 10 years | Loose, service levels not agreed at outset. | 1996 | 20-30% cost savings estimated | NO, Contract terminated after two years. Infrastructure outsourced to another vendor. |
| 50. UTILITY4 UK Electricity | 174. IT Manager 175. Managing Director 176. Vendor Manager | 75. Total Outsourcing | Senior Managers (including CEO and Board) | 3 External Bids | 12 years | Mixed: Detailed contract for operations, but a loose contract on development. | 1993 | 25-30% cost savings estimated | MIXED: Yes, cost savings achieved for operations, but no cost savings realized on new client/server development, rebuilt in-house team for new development instead. |
| 51. BANK5 UK Financial Services | 177. IT Manager 178. Union Representative 179. Vendor Account Manager | 76. Selective - 2 mainframe data centers: services and staff | Senior & IT Managers | 4 External Bids | 4 years | Detailed | 1995 | 20% cost savings estimated | NO, Some cost savings, but contract terminated in early 1997 at cost of £6 million. Decision to rationalize in-house and consolidate mainframe. |
| 52. LOGIST UK Military | 180. IT Director 181. Vendor Account Manager 182. Vendor Manager 183. Staff Representative 184. Outsourcing Consultant 185. Consultant | 77. Total Outsourcing | Senior & IT Managers | 42 bid invitations; 2 short-listed. | 5 years, renewable to 7 years. | Mixed: Detailed contract for base services; partnership deal for selling software etc externally. Preferred partner for future development work . | 1995 | 25-27% on base services; competitive bids required for future parcels of work | YES, cost savings achieved and several new development sub-contracts signed within framework. |
| 53. UTILITY5 UK Water Company | 186. IT Director 187. Vendor Manager 188. Consultant | 78. (a)selective - desk-top/WANS 79. (b) selective - development of billing systems | (a) Senior & IT Managers (b) Senior and IT Managers | (a) 3 External Bids (b) 4 External Bids | (a) 3 years (b) 3 years | (a) Detailed (b) Detailed | (a) 1994 (b)1994 | (a) Sought cost stability, better service, and culture change (b)sought external skills at competitive price. | (a) YES, IT budget reduced overall. Other objectives achieved. (b) YES, but some service issues especially on desktop contract. |
| 54. UTILITY6 European Gas | 189. IT Director 190. IS Manager 191. IS Manager 192. Contract Manager 193. Vendor Manager | 80. (a) Selective: 10 mainframes, operations and applications legacy services (100m.pound plus) 81. (b)Selective: tele-communications infrastructure | (a) Senior and IT Managers (b) IT Managers | (a) 4 External Bids (b) 5 External Bids | (a) 1.5 years, renewable for as long as legacy systems needed. (b) 3 years | (a) Detailed (b) Detailed, including unit charges | (a) 1995 (b) 1997 | (a) allow development work to proceed elsewhere; transition redundant staff; (b) 30% reduction in call costs, higher user productivity greater connectivity. | (a) YES, cost effective; problems with service measurement but service targets achieved. Staff transitioned; accelerated closure of datacenters. (b) YES, 30% reduction in call costs; more users linked |
| 55. CHEM5 European Chemicals Manufacturer | 194 Group IS Director 195 Vendor Account Manager 196. Vendor Manager 197. IT Manager 198. Outsourcing Consultant 199. Procurement Manager | 82. (a) Selective - datacenters, with related development support/services 83 (b) Selective - Telecom network 84. (c) Selective - desktop computing and telephone services | (a) Senior & IT Managers (Group IS Director and Board) (b) Senior & IT Managers (c) Senior & IT Managers | (a) 4 External Bids (b) 3 External Bids (c) 4 External Bids | (a) 5 years (b) 5 years (c) 4 years | (a) Detailed (b) Detailed, including unit charges | (a) 1996 (b) 1994 (c) 1997 | (a) 15-20% cost savings estimated; assist in 400 IT headcount reductions; provide scarce skills. (b) Reduced infrastructure costs; 20% savings on calls. (c) 15-20% cost savings estimated; 120 staff reductions sought; | (a) YES, cost savings, downsizing and skills provision being achieved. Contract extended for applications on mainframe
(b) YES, Paid vendor £3 million to take network, instead of company £5 million costs to split network in a demerger. (c) TOO EARLY TO TELL on cost savings, but staff reductions achieved |
| 56. COAL UK British Coal | 200. Vendor Director 201. Vendor Account Manager 202. Contract Manager 203. Consultant | 85. Total Outsourcing - to assist privatisation to five new companies | Senior & IT Managers (Board and IT Director) | 6 External Bids | 2 years | Detailed | 1994 | Sell financial/payroll services; Complete 8 key projects to help create five private companies; manage infrastructure | YES, objectives achieved. Vendor continues to run IT for new companies. |
| 57. PETRO6 UK-based Oil Company | 204. IT Director 205. Vendor Account Manager 206. Vendor Manager 207. IT Manager 208. Contract Manager | 86 (a) Selective. - legacy systems 87(b) Selective - development, applications and support 88(c) selective - client-server development/ support 89(d) Selective - process control systems 90(e) Selective - help desk. | (a) Senior & IT Managers (IT Director plus Board) (b) Senior & IT Managers (c) Senior & IT Managers (d) Senior & IT Managers (e) Senior & IT Managers | (a) 3 External Bids (b) 3 External Bids(c) 3 External Bids (d) 2 External Bids (e) 3 External Bids | (a) 5 years (b) 5 years (c) 5 years (d) 5 years (e) 2 years, renewed by five. | (a) Detailed - call fee and change fee basis (b) Detailed; rates renegotiated annually (c) Detailed; rates renegotiated annually (d) Detailed; rates renegotiated annually (e) Detailed; rates renegotiated annually | (a) 1994 (b) 1996 (c) 1996 (d) 1996 (e) 1993 | (a) 10% cost savings at agreed service levels expected. (b) benchmarked against market (c) niche resource at discounted, competitive price (d) niche resource at discounted, competitive price (e) 10% cost savings estimated; more office space sought; meet staff shortages | (a) YES, pricing restructured due to changes in market. Subsequent cost savings. (b) YES; 1995 price increases expected due to market forces (c) YES. (d) YES (e)YES, objectives achieved. Contract renewed. |
| 58. RETAIL6 US/UK Retailer | 209. IT Manager 210. Services Manager 211. Vendor Manager 212. Business Manager | 91. Selective - mainframe for finance. Distribution and sales analysis systems (transitional) | Senior & IT Managers (IT Director plus Board) | 4 External Bids | 3 years | Detailed contract with service levels | 1993 | 20% operational cost savings expected; refocus strategy. | YES, objectives achieved |
| 59. RETAIL7 UK Home Improvement Retailer | 213. Technical Services Manager 214. Vendor Manager 215. Business Manager | 92 (a) Selective - mainframe, hardware/software provision, product support.(transitional) 93 (b) Insourcing - applications development and support. | (a) Senior & IT Managers (b) Senior & IT Managers (IT Director plus Board) | (a) 3 External Bids (b) No Formal Bid Process, but 2 informal bids | (a) 3 years (b) indefinitely | (a) Detailed contract with SLAs and MIPs specified. (b) N/A | (a) 1996 (b) 1996 | (a) minimal operational cost savings expected; improved service, refocus, flexibility, and skills access sought. (b)IT identified as core | (a) YES, but some service issues due to lack of contractual details. (b) YES: Business knowledge of in-house people seen as core competency |
| 60. PROPERTY1 UK Investment Company | 216. Management Services Manager 217. Vendor Manager | 94 (a) Selective - PC and network maintenance 95 (b) Selective - offshore programming to move off mainframe | (a) IT Managers (b) IT Managers | (a) No Formal Bid Process, but 2 informal bids (b) No Formal Bid Process--no competing bids | (a) 5 years, renewable (b) 3 years | (a) Standard, with small supplier. (b) Detailed by number of days, deliverables and price. | (a) 1993 (b) 1996 | (a) up-to-date, technology and support at competitive prices (b) 15% cost savings expected; transition to new technology sought. | (a) YES, some cost savings achieved. (b) YES, some cost savings but speed is paramount. |
| 61. INSBROK UK Software Consortium | 218. Director 219. Vendor Account Manager 220. Senior Manager 221. Senior Manager 222. Director | 96. Selective - management and development of applications software; help-desk. | Senior Managers (CEO & Directors) | 4 External Bids | 7 years | Detailed, with SLAs and performance measures; agreed person days per quarter. | 1997 | IT resource flexibility, expertise, and high quality development software sought | YES, discounted rates achieved; 90% of costs agreed in advance; required quality products and services delivered. |
| 62. BANK6 UK Bank | 223. Business Manager 224. Vendor Manager 225. Employee Representative | 97. Selective - cheque processing systems | Senior & IT Managers (Board and IT Director) | 4 External Bids | 10 years | Detailed | 1995 | 20% cost savings estimated as a result of new IT and economies of scale | NO, contract terminated in 1996; Technology had moved on; disagreements over technical solution, costs and volumes. Deal restructured in 1997. Too early to tell new results. |
| 63. CONSULT US Management Consultancy | 226. Vendor Manager 227. In-house IT staff Member 228. Consultant | 98. Total Outsourcing (with in-house group as bid partner) | Senior Managers (Managing partners) | 3 External Bids | 5 years | Detailed | 1996 | Cost savings envisaged | NO, contract negotiations terminated due to exodus of key staff , new in-house software, and changed business requirements. |
| 64. UTILITY7 UK Electricity | 229. Senior Manager 230. Vendor Staff Member | 99. Selective - development of customer billing/services systems | Senior Managers (Board and IT Director) | 4 External Bids 5 years | Detailed; | Resource-based against deliverables | 1994 | Systems in place for 1998 deregulation of electricity market. | NO, several systems developed but project with vendor terminated. Rapid turnover of project managers, system unlikely to be produced; Changed requirements. |
| 65. EQUIP UK Engineering Company | 231. Senior Manager 232. Vendor Manager 233. Vendor Manager 234. Senior Manager | 100. Total Outsourcing - base service, development, business processes. | Senior & IT Managers (Board and senior IT) | 3 External Bids | 10 years | Detailed; service based plus risk/reward 'co-sourcing' | 1997 | 20% cost savings estimated on base services; delivery of business projects and gains sought | TOO EARLY TO TELL; some early issues on business projects. |
| 66. INSURE2 UK Insurance Company | 235. Senior Manager 236. IT Director 237. IT Manager 238. Ex-vendor Manager | 101. Selective - mainframe operations and support | Senior & IT Managers | No Formal Bid Process, but 2 informal bids | 10 years, with break-points. | Standard;some detail, but largely vendor drafted. | 1996 | 20% plus cost savings estimated | NO, renegotiated contract in 1997 after merger; further £28 million savings agreed once vendor inter-divisional transfer pricing was revised. Now 30% savings achieved |
| 67. ELECTRIC2 UK Electronics | 239. IT Coordinator 240. Vendor Manager | 102. Selective - mainframe (transitional) | IT Manager | 4 External Bids | 3 years | Detailed | 1995 | 15% cost savings estimated; refocus in-house staff on development work | YES, cost savings achieved; refocused in-house on LAN/Unix/SAP R3 |
| 68. UTILITY8 European Water Company | 241. IT Manager 242. IT Manager 243.Senior Business Manager 244. Vendor Manager 245. Consultant 246. Vendor Manager 247. Vendor CEO | 103. (a) Selective - mainframe/ support/ maintenance 104. (b) Selective - telecom/data networks; integration role 105. (c) Selective - PCs and servers; architecture project management 106. (d) mid-range application support and development 107 (e) Selective - Development of existing software e.g. finance and customer service systems | (a) Senior & IT Managers (b) Senior & IT Managers (c) Senior & IT Managers (d) Senior & IT Managers (e) Senior & IT Managers | (a) 3 External Bids (b) 4 External Bids short-listed (c) 4 External Bids (d) 3 External Bids (e) 3 External Bids | (a) 7 years (b) 3 years (c) 3 years (d) 3 years (e) 3 years | (a) Detailed
(b) Detailed, including price structure per service (d) Detailed; resource-based (e) Detailed; resource-based | (a) 1997 (b) 1997 (c) 1997 (d) 1997 (e) 1997 | (a) 15-20% cost savings estimated (b) 20% cost savings estimated (c) Cost control plus skills influx sought (d) Skills needed (e) Skills needed | (a) TOO EARLY TO DETERMINE (b) TOO EARLY TO DETERMINE (c) TOO EARLY TO DETERMINE (d) TOO EARLY TO DETERMINE (e) TOO EARLY TO DETERMINE |
| 69. AIR1 European Airline | 248. Benchmarking Manager 249. Vendor Manager 250. IT Manager | 108. Total insourcing | Senior & IT Managers | Compared 3 external bids with internal bid | 3 years | N/A | 1995 | Suppliers promised 20% savings | YES, In-house achieved 50% cost savings by benchmarking and cost cutting tactics |
| 70. RETAIL8 UK Newsagent Chain | 251. Finance Director 252. IT Manager 253. Outsourcing Consultant | 109. Total Outsourcing - Data centre operations, desktop and strategic planning | Senior & IT Managers (Board and Finance and IT managers) | 2 External Bids | 10 years | Detailed | 1995 | Skills and investment needed to shift to Oracle and EPOS | TOO EARLY TO TELL, but positive results and cost control so far |
| 71. RETAIL9 European Retailer | 254. IT Manager 255. Vendor Manager | 110. Total Outsourcing- global: all operations and IT strategy | Senior & IT Managers | 3 External Bids | 5 years | Strategic Alliance | 1996 | Cost control; Support for firm's global presence and expansion | TOO EARLY TO TELL; Problems in 'globalising' the contract. |
| 72. INSURE3 UK Loss Adjuster | 256. IT Manager 257. Vendor Consultant | 111. Selective - 24-hour service operations and network management | Senior & IT Managers | 3 External Bids | 5 years | Detailed | 1996 | Access to high calibre network staff ; 15% cheaper operations without asset investment | YES, objectives being achieved. |
| 73. FINANCE1 Australian Finance & Property Service Company | 258. IT Manager 259. IT Manager 260. Board Member 261. Outsourcing Consultant | 112. Total outsourcing - applications development., systems integration, project management, operations management of mainframes, mid-range, desktop and communications | Senior & IT Managers | No Formal Bid Process | 5 years | Strategic Alliance; Semi-detailed for operations; 35% equity share taken in vendor as a joint venture | 1995 | Cost savings and improved service levels expected. Also value-added expected | NO, objectives not being met; contract too loose, supplier not motivated to be pro-active. Alternatives considered in 1997 but overtaken by merger activity. |
| 74. PSB9 UK Social Security Department | 262. IT Manager 263. Auditor 264.Employee Rep. 265. Vendor Manager | 113 (a). Total outsourcing - distributed systems - data and network communications services (Note: DSS totally outsourced using multiple supplier strategy)
114 (b). Total Outsourcing: data centre services. | (a) Senior & IT Managers (Ministers, and senior executives/Board members) (b) Senior & IT Managers | (a) 6 short-listed suppliers for five packages of work (b) 2 External Bids | (a) 5 years (b) 10 years | (a) Detailed (b) Detailed | (a) 1995 (b) 1995 | (a&b) Cost reductions on in-house performance estimated at £399 million, improved service, smooth transfer of staff, and response to future customer needs sought. | (a) MIXED: Cost reductions of 30% on in-house costs in first three years achieved but costs need to be assessed over length of contract. Much depends on price controls in contracts and requirement changes and demand for technology. Smooth staff transfer; some early service problems in distributed systems. (b) YES, cost savings being achieved |
| 75. BANK7 US-based Global Bank | 266. Consultant 267. Vendor Manager | 115. Selective Outsourcing: data centers, desktops, networks, corporate applications | Senior & IT Managers | External bids reduced to 4 suppliers organized through an alliance | 7 years | Mixed: Primary contractor responsible for managing subcontractors | 1996 | 15% cost savings estimated, pay for use only, access to new IT and skills, improved skills, re-focus in-house staff | MIXED: 8% cost savings so far, 3 out of 5 client satisfaction rating |
| 76. EQUIP2 US Manufactur-ing Company | 268. IT Manager 269. IT Manager 270. Vendor Manager 271. Business Manager | 116: Total Outsourcing | Senior Managers | Compared 3 external bids to informal internal bid based on "how much would this cost if we did it ourselves" | 10 years | Mixed: Detailed in only parts, loose in parts, relationship elements | 1994 | Systems replacement, refocus in-house resources on business solutions, sought variable IT costs, improved service, access to new IT and skills; also value-added from supplier selling customer software on market | MIXED, In first 2 years service problems led to contract renegotiation in 1996 from loose contract to detailed contract; difficulties in operational-izing partnership led to return to customer/Supplier model; external sales never materialized |