The Outsourcing Project
CxO Research Ltd
Atos Origin FOCUS A CxO Research Initiative – Achieving Competitive Advantage through Collaborative Partnerships
Transparency in Outsourcing The push for more Transparency
John Dain Senior Vice President Global Managed Operations, Atos Origin
The drive to outsource has been going on since the late 1980s as companies strive to reduce their costs, take advantage of technological developments and develop long-term IT strategies. Outsourcing always involves long-term relationships and when such an agreement is made the outsourcing service provider is often selected on their reputation and a series of expectations. In any such relationship it is completely normal that problems may occur from time to time. Furthermore, there is nothing wrong in admitting that sometimes living up to those expectations can be difficult. Situations change continuously and the outsourcer can sometimes encounter similar issues as those that occur between the parts of any enterprise and their in-house IT department. Here transparency is crucial in maintaining trust and a sense of perspective. In fact the role that transparency plays in the way that these problems are dealt with and resolved will ultimately lead to a stronger and more effective partnership.
Business Drivers and Responses in the IT Services Landscape The IT services market landscape is constantly changing due to a number of critical business drivers. They are pushing both service provider and recipient to respond with a number of solutions to address these issues, and these require transparency on both sides to be truly effective. Generally, the business drivers fall into three major areas: technology, business demands and regulatory compliance issues such as Sarbanes-Oxley, IFRS and TUPE.
Technology Technology changes are affecting IT capabilities in areas such as networks, bandwidth, processing power, storage, packaged solutions. They are removing any limiting factors and barriers to what can be achieved and are even pushing enterprises towards implementing certain solutions.
The advances in processing power and virtualization technology that have taken place over the last few years have given extra impetus towards recentralizing IT. This enables the rationalization of enterprise IT infrastructures beyond what has previously been possible through consolidation. Virtualization technology also helps to keep costs, as regards disaster recovery and business continuity to a minimum, and many enterprises use it as the first step in a move towards a Utility Based Computing (UBC) environment. Technology has also led to the development of the more flexible service-oriented architecture (SOA), with a mixed insourced/outsourced, onshore/offshore staffing model. Open-source software has become mature and accepted and is becoming increasingly important. But despite such advances, security remains a core concern within user companies and vendors.
www.cxoeurope.com
00
Atos Origin FOCUS
Wireless communication technologies, with RFID leading the charge, will connect objects to each other and to data collection environments. Mobile users in all but the remotest regions will be able to exploit significantly improved wireless transmission rates and seamless domain roaming, supporting the continuation of a wireless session across different networks (for example, from a wireless hot spot to a WAN). Finally the Internet has created a much more ‘connected’ way of doing business. Many service providers, including Atos Origin, can increase transparency through web-based service portals or extranets. These can enable the client to see exactly what is going on in the contract and even be able to influence it as well by indicating the changes they want. In effect, a ‘Management Dashboard’ which can grow in line with new developments and allow for services to be added or amended at any time. To be truly effective, work needs to be parameterized on the delivery side in such a way that the requested changes can be implemented either automatically, or with only minor human intervention. This is typically a win-win situation. It enhances the customer experience because they feel that the request for change is part of a solid procedure and not treated as exception, and on the supplier side, it both decreases cost and potentially increases turnover through making it easier to provide additional (or less) volume and functionality.
Business Demands Business demands are changing very quickly and more unexpectedly meaning that businesses must become more flexible. Furthermore, being able to link business demands and emerging technology in a transparent way demonstrates value, attracts management attention and secures resources for innovation. Businesses are more and more calling for a flexible technology infrastructure, one where business demands for IT resources can be automatically met. They want an efficient, self-managing infrastructure where fixed costs are replaced by variable pay-per-use costs and the enterprise can move expensive, rapidly depreciating assets off its balance sheet. They also want to take advantages of the advances in service-oriented architectures and the potential of on-demand sourcing models.
00
www.cxoeurope.com
A key driver for an enterprise's business strategy is its ability to adapt to a changing business environment. IT executives must create an evolving governance architecture based on an organizational structure, principles and decision making processes that can deliver the greatest advantage to the business. Traditional IS organizations must adopt new, agile and flexible governance mechanisms to support changing business processes and IT managers must understand how the business environment and technology is changing in their specific industries. Here, transparency in customer and supplier relationships is an ever-more essential part of operating a business. Finally, the ongoing need for enterprises to reduce IT spending in terms of Total Cost of Ownership (TCO) and execute change has led to the drive to harmonize IT services and operational processes, with service levels being defined across regional, international or global organizations. Furthermore, successful commoditization and consolidation enables these services to be moved offshore without impacting on flexibility and quality even more effectively, thus delivering even greater savings.
A key driver for an enterprise's business strategy is its ability to adapt to a changing business environment. Regulatory Compliance Compliance issues have seen many enterprises struggling with how to contain costs for adhering to regulations such as SOX, IFRS, FDA, Basel II, HIPAA etc, and it is expected that this will account for some 15% of IT budgets in 2006. This has also caused the market to recentralizing IT as a well-structured, standardized and consolidated IT environment that can make the implementation and maintenance of systems to support such regulatory requirements less costly. As the pressures of regulatory change related to enterprise risk management and the desire for information transparency
Atos Origin FOCUS
A CxO Research Initiative – Achieving Competitive Advantage through Collaborative Partnerships
intensify, managers and directors need to attain a deeper view and increased control of operational risks and compliance execution. Transparency makes the business's operations more auditable by increasing visibility into core processes and this is critical to maintaining trust and keeping performance in line with client, investor and regulatory expectations. It also provides the basis for being able to plan and carry out continuous improvement and allows for the creation of a baseline that can be used for future comparisons. The IT Services market has reacted to the changes in these 3 areas with solutions that are moving the IT
With so many different drivers and influences affecting the IT landscape today, it is hardly surprising that enterprises are looking for greater transparency from a service provider.
The customer is ultimately responsible for its own business, despite certain areas or processes being outsourced, and so needs to retain full control and clarity over all information and processes. Here, transparency provides a single view of the services on offer and the projects being supported. This helps creates the atmosphere in which a long-term and mutually beneficial relationship can flourish. Traditionally a relationship was determined by a set of pre-defined rules that lasted throughout the duration of the contract governing that relationship. Any changes, (be they process, functionality and sometimes even volume), were seen as exceptions that needed contract negotiations to discuss and accept, and often work-groups and project teams to implement. But today there is a need for more flexibility in response to a more dynamic business world. So more transparent contracts are constructed to accommodate change and make the financial consequences predictable. This radically reduces the need to negotiate and therefore the total time to effect the required change. Changing service requirements, be it to take into account holidays, industrial disputes, sudden changes in product demand or supplier issues all mean that it is critical that the customer has a real-time and accurate picture of what IT services it is buying, and how much of it, and can vary these to fit demand through an ‘on- demand/UBC’ delivery model. Such a model also allows a customer to see if it is making the most efficient use of its IT services, and the ability to fine tune the situation adds to trust and confidence in the relationship. Finally, innovation is a much-used word today and often a key commitment from the service provider. Within an outsourcing relationship, there has to be the ability for the customer to actually openly check that the service provider is aware of the potential of any new innovation and is actually following the latest trends and doing something about it!
The importance of Transparency in a Relationship
Transparency can provide a Win-Win Situation
Transparency is important in many areas of the relationship. To begin with there is often a graduated level of dependency between the service provider and the customer. Each needs to know exactly who is responsible for what, as any ‘grey areas’ can lead to confusion and dissatisfaction. For example, some business may be concerned about a possible lack of control due to subcontracting by their outsourcers.
It might be assumed that by introducing more transparency in outsourcing that it would mainly be to the benefit of the client. However, if properly structured and managed, transparency can be of equal and possibly even slightly greater benefit to the service provider. But whatever the degree of benefit, the mutual benefits to the overall relationship are considerable.
With so many different drivers and influences affecting the IT landscape today, it is hardly surprising that enterprises are looking for greater transparency from a service provider. Landscape towards: • More centralization • A return to mainframes • Virtualization • Utility-Based approach • Application rationalization • Global Sourcing
www.cxoeurope.com
00
Atos Origin FOCUS
Client benefits include: Greater control leading to better trust and a ‘what you see is what you get’ situation (See Gartner report ‘Trust and Control’). Congruency, where perception and reality are the same. • Reduced TCO. • Better consistency of services. • Greater management/end-user satisfaction. • Integrated management processes across both companies in areas such as invoicing, service orders, communication, etc. Service Provider benefits include: • Improved client satisfaction and long-term relationship – Measurable/Manageable. • Lower technical admin costs. • Improved quality of invoicing and improved DSO (Daily Sales Outstanding). • Lower cost of implementation through standardization. • Improved internal communication by breaking down barriers between delivery units. • Resolving the client ‘catalogue’ issue. • Enhanced end-user experience allowing more one-toone marketing and up-selling. • The ‘Shared Values/Goals’ approach is a commercial USP. •
Creating the Conditions for Transparency There are a number of conditions that help a service provider to maximize the benefits from transparency. An outsourcer has to have the established skills and competencies in order to be able to deliver flexibility at low cost. They need to have an application portfolio properly in place and to be able to deliver standard processes. Also they need to be able to leverage massive synergies and to be able to partner across the customers complete value chain. A clear governance model is also an essential prerequisite to achieving transparency. This is a cornerstone of Atos Origin’s approach to outsourcing and is well documented in our white paper on Demand Supply Management which was also published in the Outsourcing Project in 2005 and is available on Atosorigin.Com.
000
www.cxoeurope.com
Another condition is that contracts have to allow flexible volumes and quality changes without any renegotiations. They need detailed and accurate price information to be able to order or cancel services as required in response to changing business needs. Furthermore, customers need to be able to have a real-time insight into the services they are receiving to be able to see the status of the ‘kitchen’ of the outsourcer! They need to have control over these and to be able to audit them easily. All these areas can be best facilitated through the ‘Dashboard’ model where the customer is fully empowered to drive or control the relationship to respond to the dynamics of its own particular business situation. Atos Origin has established web-based portals or extranets which enable the client to see exactly what is going on in the contract and influence it as well.
Summary Ultimately both the service provider and the customer need each other to achieve their business goals. However, in the case of outsourcing, the relationship itself is the most critical aspect. To be successful it must be long-term and open, and ideally grow to the benefit of both parties. Transparency is vital in creating these conditions and the trust required to make the relationship work. However, a service provider must not only demonstrate the intention to be transparent but must be able to actually deliver transparency in a tangible and practical way, based on a sound governance model. This can ultimately lead to the ‘Dashboard’ model where the customer is fully empowered to drive or control the relationship to respond to the dynamics of its own particular business situation. Finally, if transparency is seen as a serious element of an outsourcer’s service delivery approach, this can be a major factor in influencing a client’s decision to select a service provider as a long-term outsourcing partner.
Atos Origin FOCUS
A CxO Research Initiative – Achieving Competitive Advantage through Collaborative Partnerships
Standard Chartered Bank Achieving Significant Cost Reductions through Data Center Consolidation Atos Origin and the Standard Chartered Bank have entered into a seven year international outsourcing agreement covering the managed operations of the bank’s Data Center infrastructure. Atos Origin will deliver an improved level of performance and reduce costs through the deployment of new technologies and greater standardization and consolidation. The new relationship and framework will also allow Standard Chartered Bank and Atos Origin to explore other areas of cooperation.
Business Challenges Standard Chartered Bank was looking to achieve greater leverage of its IT resources for the business across the Asia Pacific region. It also wanted to move from its current technology and mode of operations in the Asia Pacific Data Centers to a new technology base and mode of operations that would delivers higher service and quality levels to its customers at an improved Total Cost of Ownership (TCO). There was also a desire to improve the resilience of the services and to be better able to support the future growth plans of the business. And, as one of the world’s leading international banks, achieving this with a partner they could trust and with the minimum risk to both the business and their customers was a top priority.
Solution Together with Standard Chartered, Atos Origin developed a Transition Program to prepare for and deliver this major change which has involved around 34,000 end users, 650 servers and 190 applications across 19 countries. Central to this was the migration to a new mode of operations. This included consolidating the data center from 4 locations to a twin Data Center location based in Hong Kong and integrating with the bank’s own IT service centers. From these centers, Atos Origin now runs the majority of the banks core consumer and wholesale banking platforms, as well as systems linked to ATM's. Services include mirrored disaster recovery facilities, and new storage and service desk facilities.
Another feature of the solution has been technology refresh (hardware and software) covering nearly 95% of the mainframe, midrange and storage platforms for Standard Chartered’s business operations. New processes, procedures and supporting tools for Data Center operations have also been deployed. This includes Atos Origin’s own ITIL-based Continuous Service Delivery Model which ensures globally consistent processes and service delivery and Global Enterprise Management System (GEMS) tool, which enables distributed monitoring as well as technical and service support from region-wide service centers. The first Phase of the program to establish the new infrastructure (facilities, technology and process) began during 2004 with the second Phase, completing in 2005. This was structured as a series of migrations in which individual country’s processing facilities moved to the new location in Hong Kong and which also involved the decommissioning of 3 other facilities.
Benefits Standard Chartered was looking to achieve greater leverage of its IT resources for the business across the Asia Pacific region. Its new twin Data Center mode of operations now has higher resilience and disaster recovery capability across all production systems and Atos Origin has agreed to, and is delivering, higher performance targets within the Service Level Agreements (SLAs). Furthermore, there have been no single points of failure within the supported infrastructure.
In terms of TCO, the Standard Chartered has been able to realize a 50% reduction in cost of mainframe operations and a 30% reduction in cost of midrange operations. And as part of this long-term agreement, Atos Origin has been able to offer more flexible and scalable pricing, giving even greater economies as the business grows. “This is a long term partnership that will leverage the latest technology to deliver significant cost and capability benefits to the Bank.” Peter Sands, Finance Director of Standard Chartered Bank
About Standard Chartered Bank Standard Chartered is one of the world’s most international banks, employing over 40,000 people, representing 80 nationalities, across its network. Standard Chartered operates in over 1,200 locations (including subsidiaries, associates and joint ventures) in more than 50 countries in the Asia Pacific Region, South Asia, the Middle East, Africa, the United Kingdom and the Americas. Standard Chartered serves both Consumer and Wholesale Banking customers. Consumer Banking provides credit cards, personal loans, mortgages, deposit taking and wealth management services to individuals and small to medium sized enterprises. Wholesale Banking provides corporate and institutional clients with services in trade finance, cash management, lending, securities services, foreign exchange, debt capital markets and corporate finance. Standard Chartered PLC is listed on both the London Stock Exchange and the Stock Exchange of Hong Kong and is in the top 25 FTSE-100 companies, by market capitalization.
www.cxoeurope.com
000
Atos Origin FOCUS
WORLD-CLASS INFORMATION TECHNOLOGY EQUAL TO THE SCALE AND MAGNITUDE OF THE OLYMPIC GAMES "We are extremely pleased to have expanded our partnership with Atos Origin as the Worldwide IT Partner for two more Games. Today the role and use of Information Technology is vital for the staging of the Games. Atos Origin was a crucial player in the success of the delivery of the Athens 2004 and Torino 2006 Olympic Games. We are confident that, in the future, Atos Origin will deliver an outstanding job for the Beijing 2008, Vancouver 2010 and London 2012 Olympic Games." Jacques Rogge, President of the International Olympic Committee (IOC)
BUSINESS CHALLENGES Atos Origin is the Worldwide IT Partner for the International Olympic Committee (IOC) for the Olympic Games of Athens in 2004, Torino in 2006, Beijing in 2008, Vancouver in 2010 and London in 2012. This set a new world record as the largest sports IT contract ever awarded. For the Torino Olympic Winter Games in 2006, Atos Origin led the consortium of technology partners developing and managing the systems and software that power the Information Technology solutions.
SOLUTIONS As lead integrator, project manager and IT operations manager, Atos Origin has also developed many of the key software applications used. Successfully delivering one of the largest IT projects in sports history represented a staggering task. The sheer volume of
000
www.cxoeurope.com
information processed to run and document the event creates a massive and complex IT environment requiring a dedicated power infrastructure, 450 extremely sophisticated data network Lenovo servers, 4,700 Lenovo computers, 1,800 results systems terminals and 700 Lenovo printers. One characteristic of this environment is the high degree of redundancy in data processing, which necessarily calls for fail-safe accuracy in data transfer. Another is the innovative IT security built into the entire IT environment, which could effectively be considered the highest-profile data system in the world over the course of 16 days. Protecting the Games’ IT infrastructure from undesired and/or uncontrolled phenomena that can impact any parts of the result chain and associated services is paramount. The innovative approach features monitoring of all deviations from ‘normal’ behavior of crit-
Atos Origin FOCUS
A CxO Research Initiative – Achieving Competitive Advantage through Collaborative Partnerships
ical parameters in critical areas (applications, systems and networks), plus screening and correlation of all ‘alerts’ to allow the security team to focus and act only upon critical issues. Finally, there is the unparalleled testing program to ensure that smooth, seamless operations are ready on time. For an event of this magnitude, deadlines are not negotiable. When world-class athletes are ready to compete for gold after years of rigorous training and qualification, there are no second chances.
Key components of Atos Origin’s IT mission • Infrastructure deployment • Critical monitoring system • Technology Partner management • Knowledge capture and transfer Key capabilities demonstrated by Atos Origin for this Olympic Games project • Systems integration • Information security • Critical monitoring system • Technology Partner management • Knowledge capture and transfer Achievements successfully completed • Competition results delivered to all participants, athletes, officials, media and press • Knowledge leveraged for the design of all key IT systems (3 to 5 years before start of Games) • Key core planning applications provided and deployed (3 years before start of Games) • Results systems integrated and tested (2 years before start of Games) • Complete array of IT systems operating and monitored once the Games began
BENEFITS As one of the most high-profile customers that Atos Origin has ever had, the International Olympic Committee (IOC) has spurred Atos Origin to take on new directions since its involvement with the Olympic movement in 2004. The Athens 2004 Olympic Games was accomplished with significant cost and operational savings over previous Games. Atos Origin provided this without in any way increasing the risk of its technology operations, and actually succeeded in reducing the risk. Today’s systems implementations objective is focused on minimized cost with minimized risk. This is demonstrated in the Olympic Games program through massive re-use, facilitated by systematic knowledge capture and thorough, disciplined systems integration practices to redeploy large applications into new environments every other year. Specific components of the IT program critical to the Olympic Games’ success include the integrated, holistic approach to security used to manage the highly visible publicly targeted environment. Other factors include effective partner and program management for the highly complex program comprising a diverse consortium of technology partners; intensive operations management; and design and building phases leveraging the knowledge base created through work at previous Games, which significantly reduce the learning curve. Meeting the immovable deadline with guaranteed quality every time can only be achieved through relentless testing. Exhaustive preparation and testing were clearly vital to the success of the IT systems, to deliver seamless services and sub-second communication to the Olympic Family (partners, IOC members, athletes and media). Simulation testing was also used to develop test cells representing each of 15 sports disciplines and nine major applications.
For each country where the Olympic Games are held, an Organizing Committee responsible for hosting and managing that particular edition of the Games is set up. Atos Origin partners with each Organizing Committee while working with the IOC to meet its strategic objectives. This kind of commitment and attention to detail at the local level was a factor that led to Atos Origin being selected for this most prestigious of contracts.
About Atos Origin Atos Origin is an international information technology services company. Its business is turning client vision into results through the application of consulting, systems integration and managed operations. The company’s annual revenues are more than EUR 5,5 billion and it employs over 47,000 people in 40 countries. Atos Origin is the Worldwide Information Technology Partner for the Olympic Games and has a client base of international blue-chip companies across all sectors. Atos Origin is quoted on the Paris Eurolist Market and trades as Atos Origin, Atos Consulting, Atos Euronext Market Solutions and Atos Worldline.
The Olympic Games is the largest sporting event to take place worldwide and at regular intervals every two years. At the TORINO 2006 Olympic Games, Atos Origin developed the IT solution for the accreditation system that allowed Kodak to issue and activate 90,000 accreditations for Games comprising 84 events and represent thousands of hours of live competition. Live commentator services were delivered for 19 sports and approximately 250,000 INFO2006 pages viewed every day. The Winter Olympics spans 28 competition and non-competition venues, involves 2,500 athletes, 10,000 members of the media and 20,000 volunteers.
www.cxoeurope.com
000
Atos Origin FOCUS
Establishing/Living a Successful Strategic Partnership KarstadtQuelle AG, based in Essen, Germany, is Europe’s leading department store and mail order group. The Group achieved sales of EUR 15.7 billion in the financial year 2005. The Group’s business segments include Over-the-Counter Retail, Mail Order, Services, Real Estate and Tourism. The KarstadtQuelle Group employs around 62,500 staff.
Dr Peter Patzina CIO Mail Order KarstadtQuelle and Managing Director of Itellium GmbH
Introduction In late 2004, Atos Origin and KarstadtQuelle AG announced a long-term outsourcing agreement under which Atos Origin took over the Infrastructure Division of Itellium Systems and Services GmbH, KarstadtQuelle’s IT subsidiary. Around 900 staff transferred to Atos Origin under a business transfer arrangement. For last year’s edition of the Outsourcing Project, my former colleague Ulrich Engelhardt, then CIO, Over-the-Counter Retail, KarstadtQuelle, described how the outsourcing agreement with Atos Origin came about. Now, some 18 months into the agreement, it is worth considering where the partnership is, what lessons have been learned and what the future holds!
Meeting the challenges The original outsourcing deal between KarstadtQuelle and Atos Origin was negotiated according to a very tough schedule. As part of this, Atos Origin took over the Infrastructure Division of Itellium Systems and Services GmbH, KarstadtQuelle’s IT subsidiary and internal service provider. Here, because of the historical development of this situation, many of the services and service levels were only partially fixed in contracts. However, it was also clear that, generally speaking, Atos Origin would take over and continue to provide the services as Itellium had done before. The key challenge for Atos Origin was to establish its services under strong and immediate cost cutting pressure while maintaining the quality. They have also had to integrate over 900 people, establish their own proce-
000
www.cxoeurope.com
dures and processes and consolidate their services and portfolio in line with other deals in order to achieve the necessary economies of scale for delivering cost reductions. Meanwhile, also as a direct result of the need to reduce costs, KarstadtQuelle closely examined all the IT services it received concerning both quality and quantity. This meant that shortly after the deal we began to change our demands for IT services at a time when both parties are normally trying to establish a stable relationship between demand and supply!
Establishing Transparency as a key success factor in Outsourcing KarstadtQuelle has also had to establish what is called ‘Vendor and Service Management’. This was in order to not only guide the transformation project, but also to establish a healthy relationship with the service provider and ensure that our business needs were met. Here we believe that establishing transparency in the relationship is one of the key success factors for achieving effective and efficient service-delivery, and therefore also for creating a stable and successful partnership. The first important task for Vendor Management was the creation of a detailed overview over all the services and relationships so that both parties knew exactly what was involved and their responsibilities. Based on that and the existing requirements, both sides could then work on establishing exactly what was required from the demand side and then work on delivering the necessary quantity and quality of these services through agreed Service Level Agreements (SLAs).
Atos Origin FOCUS
A CxO Research Initiative – Achieving Competitive Advantage through Collaborative Partnerships
For a successful transition process a number of project teams and steering committees on different management levels had to be established. Special importance was given to the structuring and defining of clear processes for reporting and also for the ordering and invoicing of services. Thus Vendor Management became the link between the business units and IT-Management on the one side and the supplier(s) of IT-services on the other. Another aspect of a successful partnership is that it is normally based on two principles, trust on the one hand and ‘challenging the partner’ on the other. From our side this means that we are looking to see improvements in speed, the establishment of new processes,
When we look at where we stand after 18 months of our partnership, we can state that there has been a very smooth transformation without noticeable problems in the quality of existing services. reduced costs, as well as system stability and quality improvements. However, we must bear our responsibility and realize that our partner has taken over a certain structure and history. Finally, both parties must accept the need to look for future opportunities to develop the relationship, be they from a business opportunity or technology innovation point of view.
Taking the partnership forward When we look at where we stand after 18 months of our partnership, we can state that there has been a very smooth transformation without noticeable problems in the quality of existing services. Of course, new applications
and new services bring new challenges, but we are sure that we will be able to manage these also. Some things are always unexpected or need time and one (probably under-estimated) issue was, and partly still is, the establishing of the new invoice processes and clear reporting structures. However, by maintaining an open dialog with each other we are able to not let it detract from the overall goals of our partnership. Together we have been able to achieve significant cost-reductions right from the start of our partnership. For the future we have to face the challenge that our business demands are constantly changing and therefore so are our needs for the IT support of our business processes. This brings new challenges for the partnership (e.g. outsourced services, which become unnecessary) but also new business opportunities (e.g. new services for our business or new possibilities through new technologies). And in a successful partnership, both sides need to focus on both aspects. I am clear that the basis for building a successful relationship, one that is capable of not only surviving, but also developing and growing to the benefit of both parties, is the establishment of stable services in an atmosphere of solid trust and transparency.
About the Author – Peter Patzina Dr. Peter Patzina is Managing Director of Itellium Systems & Services GmbH, responsible for consultancy and systems integration for the mail-order business of KarstadtQuelle and also CIO of the mail-order business of the group. After studying business administration and completing a post-graduate-study, Peter Patzina started as a management trainee at Quelle in 1990. After several management positions in IT he became CIO of Quelle and Neckermann, the two big mail-order companies of KarstadtQuelle. In 2003 he became Managing Director of Itellium.
www.cxoeurope.com
000
Atos Origin FOCUS
Atos Origin hosts and manages critical business applications for Network Rail Atos Origin hosts and manages critical business applications around the clock, helping Network Rail offer a safe and reliable service to its customers
BACKGROUND Employing over 30,000 people, Network Rail owns 21,000 miles of track and 2,500 stations in the UK. The company is responsible for all aspects of the national rail infrastructure – planning and coordinating the movement of trains, producing a workable timetable and providing access to the rail network. It is working to rebuild Britain’s railway and is spending £14m a day to provide a safe, reliable and efficient rail infrastructure for freight and passenger trains. The availability and integrity of its IT systems and business applications is critical to the achievement of Network Rail’s service obligations to the Train Operating Companies (TOCs) and for the service to – and safety of – the traveling public and the freight companies who use the UK rail network.
BUSINESS ISSUES Network Rail has to deliver the highest quality of service to its customers under a strict UK regulatory framework: any failure results in severe financial penalties. Its mission critical business applications support the
000
www.cxoeurope.com
required levels of safety and operational efficiency, but running such applications is not the heart of its business. To enable Network Rail to focus its energies and resources on the task in hand – meeting the challenging targets imposed upon it by the government – it was crucial to find a partner to manage its core applications environment. Network Rail not only wanted service level guarantees, but also the assurance that its applications would always operate at maximum efficiency through continuous improvement and innovation and that its IT expenditure would be strictly controlled.
SOLUTION Network Rail chose Atos Origin because of its proven experience in running mission critical applications for the transport industry. With a portfolio of clients including Virgin Trains, National Express and Stagecoach, serviced by some 700 highly skilled personnel, it was clear that Atos Origin had the credentials. Throughout the lifetime of the relationship with Network Rail, Atos Origin’s focus has been on transforming service delivery through
Atos Origin FOCUS
A CxO Research Initiative – Achieving Competitive Advantage through Collaborative Partnerships
ongoing investment, and simultaneously reducing costs. The transformation program has included: • Relocation of mainframe services to a tier one purpose built data centre • Updating of connectivity infrastructure • Upgrading the operating system on the mainframe therefore providing a platform for future enhancements • Introduction of a new back up/storage solution that removed the need for storing data on tapes • Implementation of a new Disaster Recovery (DR) solution that supports a recovery within four hours where previously the recovery time was up to 28 days. Applications hosted from the Atos Origin data centre, crucial to the provision of a safe and reliable train network, include: • Train planning applications that enable Network Rail to produce and publish workable timetables. The train planning systems provide plans for 214,000 end-to-end passenger and freight train journeys a year which are planned through 8,726 geographical train planning points • Train operations applications that monitor whether 30,000 trains a day are in the right place at the right time. Service charges have been reduced by 30% while stringent service level agreements (SLAs) have consistently been exceeded. “We aim to surpass Network Rail's expectations and have consistently achieved high levels of service availability and customer satisfaction,” says Jeremy Nuttall, Service Delivery
Director for Transport Operations at Atos Origin. “We are 'a safe pair of hands' when it comes to operating business critical applications due to the expertise and dedication of our staff and the close working partnership
The current service improvement program includes plans to web enable the legacy systems, so that these systems have a modern look and feel and are more familiar to new users, therefore reducing the training
“We aim to surpass Network Rail's expectations and have consistently achieved high levels of service availability and customer satisfaction,” that operates between Atos Origin and Network Rail.” A significant factor in that success is that the Atos Origin personnel involved have the skillsets required and have also achieved Capability Maturing Model Integration (CMMI) Level 3 and ITIL (IT Infrastructure Library) accreditations. Atos Origin is continually driving improvement through collaboration with Network Rail. Continuous Improvement Meetings are held once a quarter and new ideas with their potential costs and benefits are discussed. One recent application enhancement proactively suggested by Atos Origin assisted users who were having difficulty identifying trains that had changed the start of their journey several times (typically for operational reasons). This was done by adding a new database key. This has significantly eased problems that Network Rail were having in their downstream performance management systems.
requirement. Both the high quality of service and process innovation have been key factors in annual savings on operational IT costs – amounting to millions of pounds per year.
BUSINESS BENEFITS •
•
•
Multi-million pound savings over the contract term due to Atos Origin’s Application Management service – together with its own working practices efficiency drives – enabling Network Rail to realize cost benefits of 30% since 2000. An improved disaster recovery service has significantly reduced the risk to Network Rail by having a faster recovery time and single recovery mechanism for all mainframe applications should a disaster occur. Atos Origin consistently exceeds required service levels for application availability, in turn enabling Network Rail to honor its service obligations to its own customers.
www.cxoeurope.com
000
Atos Origin FOCUS
Philips Semiconductors Innovative Application Management and Global Sourcing approach gives Philips Semiconductors an added ‘Impulse’ bringing significant business benefits and cost savings!
Atos Origin has combined its Application Management expertise with a Global Sourcing approach to deliver cost savings, a more effective way of working and improved quality to Philips Semiconductors. The agreement covers the development, implementation and maintenance contracts for the Philips Semiconductors chosen solution for PDM (Product Data Management) and BcaM (Business Creation and Management).
BUSINESS CHALLENGES To continue to meet its business targets and maintain its leading position in an increasingly competitive global market, Philips Semiconductors was looking for improvements in two key areas – operational efficiency and costs.
SOLUTION To tackle the issue of operational efficiency, Atos Origin and Philips developed an improvement program to support the management and exchange of product definition data in all stages of the product lifecycle. This is critical for Philips Semiconductors as it is the fundamental backbone of all product data. In order to control costs and maintain quality, a Global Sourcing approach was central to delivering the required benefits and savings as it ensures formalized procedures and processes, as well as continuous improvement and maturity growth. Global Sourcing was implemented for the application management element and covered areas such as program-
000
www.cxoeurope.com
ming, testing, documenting changes, de-bugging, improving and correcting as well as the help-desk. Representatives from Philips Semiconductors visited Atos Origin’s facilities in India to verify the offshoring capabilities and these were found to be mature and fully in-line with their requirements. Finally, most of Atos Origin’s recurring services have been defined into a Service Catalogue for Philips and a utility-based approach to pricing introduced to determine the monthly invoice. This allows Philips to know precisely what they are buying from Atos Origin, broken down to logical service components, and to actively manage and control their IT costs.
BENEFITS This innovative approach has allowed Philips Semiconductors to realize significant cost savings without having to sacrifice quality or service. The experience of Global Sourcing has also made Philips realize that the benefits are greater than simply costs alone.
Atos Origin FOCUS
A CxO Research Initiative – Achieving Competitive Advantage through Collaborative Partnerships
Processes are more mature and this has led to a more structured and precise approach. There is more focus on deadlines and they are more often met. Services are delivered exactly as described in terms of time, content and quality and this has meant that Philips them-
Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies, as well as the largest in Europe, with 159,709 employees in over 60 countries and sales in 2004 of Eur 30.3 billion. selves have also had to become more specific in formulating their questions and requests. Furthermore, a new ‘Front Office/Back Office’ model has brought improved communication and greater transparency. This, coupled with better and more detailed reporting, has led to greater confidence within Philips itself as to the ability of IT to really support its business needs. In fact, this project has become a benchmark across Philips for assessing quality and cost. A greater level of trust between Atos Origin and Philips has also grown from this and both
parties are now exploring new business opportunities and the possibility of moving more application management offshore. “Although it was initially about reducing costs, Atos Origin has demonstrated to us that there are also other significant benefits, such as continuous process improvements and greater pro-activeness, to be gained from a Global Sourcing approach to application management.” Henk Grootegoed, Service Delivery Manager PDM & Manufacturing solutions, Philips Semiconductors Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies, as well as the largest in Europe, with 159,709 employees in over 60 countries and sales in 2004 of Eur 30.3 billion. Philips Semiconductors is a leading supplier of silicon system solutions for mobile communications, consumer electronics, digital displays, contactless payment and connectivity, and in-car entertainment and networking. It is one of the top ten global semiconductor manufacturers, employing more than 35,000 people, 6,000 of whom are engineers or software engineers. A global organization, it operates twenty manufacturing sites and maintains sales organizations in sixty countries around the world.
www.cxoeurope.com
000
Atos Origin FOCUS
Atos Origin is a leading international IT services
Atos Origin Headquarters
company. Its business is turning client vision into results through the application of consulting, systems integration and managed operations.
Building VN 404, PO Box 218, 5600 MD Eindhoven, The Netherlands Tel: +31 (0)40 27 89073 Fax: +31 (0)40 27 84158
Business Contact John Dain – Senior Vice President Global Managed Operations
John Dain – Senior Vice President Global Managed Operations E-mail: John.Dain@atosorigin.com Tel: +31 (0)40 27 89073
ATOS ORIGIN - A LEADING BUSINESS AND TECHNOLOGY INTEGRATOR Atos Origin is an international information technology services company. Its business is turning client vision into results through the application of consulting, systems integration and managed operations. The company’s annual revenues are more than EUR 5.5 billion and it employs over 47,000 people in 40 countries. Atos Origin is the Worldwide Information Technology Partner for the Olympic Games and has a client base of international blue-chip companies across all sectors. Atos Origin is quoted on the Paris Eurolist Market and trades as Atos Origin, Atos Consulting, Atos Euronext Market Solutions and Atos Worldline.
Atos Origin is a leading international IT services company for enterprises worldwide. Our business is turning client vision into results through the application of consulting, systems integration and managed operations. We offer truly global solutions in over 40 countries worldwide and are one of the few companies that can provide all the ‘design, build, and operate’ elements of a business solution. More than 60% of the revenue base is recurring, deriving from multi-year outsourcing and application maintenance contracts. Our business approach is based on establishing a long-term partnership approach that encourages success through mutual benefit. We aim to develop close relationships with all our clients through either joint ventures or other forms of long-term associations. We believe that this is the most productive way of develop-
000
www.cxoeurope.com
ing business today, with both parties sharing the risks and rewards of the association and helping to develop and shape the future.
World Class Solutions that Create Value across an Enterprise Atos Origin understands that it is vital for IT services and solutions to add value and to be a positive enabler for the future. As many companies today are developing into pan-European or global businesses, they also want to focus on their core activities and drive down IT costs. We respond to these issues by unlocking the potential of new business systems – delivering competitive advantage through improvements in productivity, speed and control. We have the global reach and presence to help enterprises achieve this by providing
Atos Origin FOCUS
www.atosorigin.com
comprehensive support, and IT services and solutions that add real value and act as a base for future growth. And to maximize their effect we can provide all the ‘design, build, and operate’ elements of a solution across our chosen specialist market sectors and for global or multi-national clients. We create complete business solutions, which deliver real business benefits through three balanced Service Lines – Consulting, Systems Integration, and Managed Operations. These Service Lines are the heart of our approach to the marketplace. They enable us to focus on the particular needs of our clients, providing personal service, attention to detail and true day-to-day partnership, combined with direct access to unrivalled international expertise and resources.
tions in many industry sectors. By focusing on these specific industries, Atos Consulting™ ensures that all aspects of a client organization – people, processes, and technology – are fully aligned with business strategy.
Systems Integration – Delivering Clarity from Complexity At Atos Origin, Systems Integration is not just about integrating new solutions, but includes getting the most out of legacy applications to prolong returns from existing IT investment. Successfully combining new solutions with established ones can transform the complete enterprise architecture into a single, seamless business system. Our
Successfully combining new solutions with established ones can transform the complete enterprise architecture into a single, seamless business system. Atos Consulting™ – A Key Enabler for Business Transformation Atos Consulting™ offers advice and a pragmatic, realistic approach to addressing client needs. It provides ‘end-to-end’ services and solutions, ranging from supporting strategy development through to enterprise solutions and technology decisions. This enables our clients to become increasingly effective and to generate more value through an innovative approach to business processes, well-integrated supporting technologies and strategic investments in people. Our consultants have an in-depth understanding of their clients and their businesses and a proven track record of delivering solu-
extensive experience in integrating people, processes and technologies enables us to design, build and operate practical and robust solutions. Our specialists work with our clients to develop, implement, and maintain systems that will support and enhance their overall business strategy. We work with a carefully selected group of strategic partners and vendors, such as SAP, Oracle and Siebel, to develop and implement end-to-end offerings and standardized packaged solutions in complex environments using best of breed technologies. We also perform projects using customized software, open source, and legacy applications, including various languages and design methods.
Managed Operations – Strategic Alternatives Addressing Cost and Risk Our highly successful outsourcing operations manage core IT infrastructures for clients, including datacenters, desktop support, server farms and network communication systems. We provide 7x24 ‘follow the sun’ infrastructure and application support through our global network and the company has unrivalled experience in major enterprise programs covering complex and multi-site solutions. Our Continuous Service Delivery Methodology (CSDM) guides our clients through the process of assessment, planning, implementation, transition, and ensures consistent, high quality service delivery worldwide. We also provide Business Process Outsourcing (BPO) and specialist processing services on a global basis and are a key European player in payment and card processing services, CRM and multi-channel contact services through Atos Worldline. The combination of market expertise, innovative solutions and Service Lines is the highly successful formula that has allowed Atos Origin to become the long-term partner of choice for an ever growing list of European and multi-national enterprises.
Global Sourcing - Optimizing Business Value, Rationalizing Costs Supporting and delivering these solutions, Atos Origin offers different engagement models, such as through Global Sourcing, according to the needs of your organization. We believe that partnerships are the most productive way of developing business, with both parties sharing the risks and rewards of the association by working together for future success. Successful Global Sourcing is all about getting things right first time. We can provide your organization with the right resources, at the right location, at the right time, with the
www.cxoeurope.com
89
Atos Origin FOCUS A CxO Research Initiative – Achieving Competitive Advantage through Collaborative Partnerships
right price and performance. Our offshore teams comprise true professionals and we ensure an exact match in the skills and commitment to quality that our clients require. We can offer you new offshore services beyond application development and maintenance, ranging from application portfolio rationalization to full IT services. Properly implemented, Global Sourcing can bring several major benefits to clients: • Sustainable TCO reduction • World-class quality • Flexible global delivery capabilities • Business continuity • Ease of working / transparency When considering Global Sourcing, it is important to realize that ‘low wage’ is not equivalent to ‘cost efficient’. Many other factors combine to determine the cost performance of the service delivery such as a commitment to quality and continuous improvement. And implementing a Global Sourcing approach brings with it a major organizational
Furthermore, Atos Origin’s ITIL compliant Continuous Service Delivery Model (CSDM) framework provides top quality services based
Our Global Sourcing Centers (GSC) in Asia, South America, and Europe provide global coverage and delivery scale that leverage our client facing units around the world. on global tooling and infrastructure. With currently over 3,000 staff working in centers assessed up to CMM level 5, our goal is to grow this number at least threefold in order to continuously develop our reputation for consistent worldwide service delivery. Our Global Sourcing Centers (GSC) in Asia, South America, and Europe provide global coverage and delivery scale that leverage our client facing units around the world. This enables Atos Origin to provide a unique blend
When considering Global Sourcing, it is important to realize that ‘low wage’ is not equivalent to ‘cost efficient’. impact. Its successful execution requires the support of a service provider with global experience, maturity, organizational and cultural alignment, as well as strong governance and delivery capabilities. Ensuring world class quality and service delivery is a key success factor for implementing Global Sourcing strategies. Atos Origin India has been assessed at CMMI Level 5 and all our Global Sourcing Centers to the highest levels of ISO 9001:2000 and the SEI Capability Maturity Model (CMM and CMMI).
Our strong values - client dedication, commitment to execute, entrepreneurship and conviviality – are reflected across all elements
of customer intimacy, industry and domain expertise, high responsiveness and Global Sourcing performance.
Understanding the Issues – Maintaining the Competitive Edge Atos Origin knows that choosing the right partner is critical for success. You have to be able to trust your partner and a close cultural fit needs to exist between the two companies for any partnership to work effectively.
of our company and have often been a deciding factor in the selection of Atos Origin as a partner. In many instances, we believe that joint ventures and other forms of long-term association with clients are the most productive way of developing business, with both parties sharing the risks and rewards of the association and helping to ensure a stable, profitable and growing relationship. Our strategy is based on our proven industrial heritage and well-balanced mix of service offerings in carefully chosen market sectors. This approach enables us to demonstrate an in-depth understanding of market issues and offer comprehensive and dedicated services and solutions across all industry sectors including CPG/Retail, Discrete Manufacturing, Financial Services, Process Industries, the Public Sector, and Telecom, Utilities, Media. Atos Origin has a strong and balanced presence in all the major IT spending markets of Europe and we provide comprehensive IT support operations in The Americas and Asia Pacific for our multinational client base. For more information send an email to outsourcing@atosorigin.com or visit the company’s web site at http://www.atosorigin.com
www.atosorigin.com
00
www.cxoeurope.com
The Outsourcing Project
CxO Research Ltd