Royal & SunAlliance has outsourced the bulk of its IT
infrastructure in the UK to IBM, in a deal which should reduce the
insurance firm's IT costs by about £50m over the contract's 10-year
span.
The insurance giant hopes to save about 10% from its £50m annual IT
budget. The deal includes mainframe, mid-range and desktop
computing services.
Nearly 300 IT staff at Royal & SunAlliance will transfer to IBM
next year.
The two companies will also invest in IBM's newlyformed innovation
and transformation centre to develop technologies that will cut the
time for bringing new products to market.
Andrew Turner, information systems strategic relationships manager
for Royal & SunAlliance, said there were mechanisms in the
contract to measure the performance of the innovation and
transformation centre and ensure that it delivered practical
technology and products.
"We have an annual review process for measuring key things and the
setting of performance targets by using a scorecard," he said. "We
want to make sure that the people are not wandering around the
innovation and transformation centre with good ideas and not
delivering them."
Long-term outsourcing deals can be a risky business for companies.
Earlier this year rival insurance giant CGNU scrapped a seven-year
£124m outsourcing contract with IBM as part of a drive to
consolidate its IT systems.
And last month Computer Weekly revealed that a planned outsourcing
agreement between Zurich Financial Services in the UK and IBM
Global Services had collapsed at the 11th hour.
The proposed five-year contract, worth about £400m according to a
source close to Zurich, would have seen nearly half of Zurich's IT
staff transfer to IBM Global Services.
However, Turner insisted that the arrangement with IBM was flexible
enough to change with the insurance firm's business strategy.
And, despite the recent string of "mega" outsourcing projects to
run into trouble, analysts said users were learning how to
negotiate more advantageous outsourcing contracts for their
business.
"Outsourcing in really big deals is a comparatively new phenomenon
over the last three to four years," said Tony Lock, senior analyst
at Bloor Research. "Both sides have learned an awful lot over the
years.
"I think users are becoming more savvy when negotiating agreements
with suppliers, such as what technology to include and costing
issues," Lock added.
IBM's year of outsourcing ups and downs
February
Pharmaceuticals giant AstraZeneca outsources its
IT to IBM Global Services in a £1.2bn deal
March
CGNU scraps seven-year £124m outsourcing contract
with IBM after only two years. The recently merged insurance giant
said its decision to abandon its Perth datacentre was part of a
drive to consolidate IT systems
November
Planned £400m outsourcing agreement between
Zurich Financial Services in the UK and IBM Global Services
collapses at the 11th hour. This would have seen nearly half of
Zurich's IT staff transfer to IBM Global Services
December
Global travel and real estate giant Cendant
Corporation signs a $1.4bn(£0.96bn) IT services deal with IBM. This
is believed to be one of the travel industry's largest ever
outsourcing contracts