MG Rover has negotiated changes to its mainframe
maintenance contract with CSC that will see the supplier migrate
the car maker's data to a new environment in a three-year, £15m
deal.
The unusual enhancement to the contract will mean MG Rover spends
the same as it would have done maintaining its legacy systems but
gets the benefits of moving 39 applications from main- frames to a
Compaq/Windows 2000/IFS ERP infrastructure.
When all the applications have been migrated, MG Rover will make
substantial annual savings by not having to maintain a complex
legacy environment.
Steve Walton, business systems manager at MG Rover, said, "For
three years we pay CSC what we would have paid to maintain the
legacy. But within half that time we complete our ERP
implementation and exit the mainframe. Our objective is to be off
the mainframe by Q4 2004."
The contract will not involve any transfer of staff to CSC. Walton
said more work will come in-house as CSC is relieved of its
code-cutting duties as the legacy environment is phased out.
Bob Aylott, principal consultant at outsourcing specialist Orbys,
said the spotlight had to be put on CSC's motivation to sign away
existing mainframe maintenance revenue. "It is important to ask:
what are the incentives for CSC? It could be seen to be doing
itself out of a job," he said.
"It is important to question how the supplier is going to make its
money in the long term, before signing a deal."
Walton said CSC would benefit from an improved ongoing relationship
with MG Rover if the deal succeeds. "CSC staff work on troublesome
legacy technology that does not fit the current business need, let
alone what we want for tomorrow," he said. "They recognise this, as
do we, and the relationship at times is stretched because of
this.
"CSC knows we will move away from mainframes over time and it could
be left with nothing. It is taking the opportunity to accelerate
our strategy, please the customer and be ready for a continued
healthy relationship."