ABN Amro's "excellent" preparations for the multi-supplier
outsourcing deal it announced last week should enable it to retain
control of supplier relationships over the five years of the
contract, analysts have said.
The investment bank has signed one of largest outsourcing deals by
a European bank, comprising contracts with five suppliers worth a
total of £1.23bn. Projected savings from the deal have been put at
£176m for 2007 and at least £410m a year thereafter.
Robert Morgan, chief executive at outsourcing consultancy Morgan
Chambers, said, "One of the characteristics of multi-sourcing is
that you have to retain more control." But he said ABN Amro's
careful approach augured well for the long-term maintenance of
clear relationships with suppliers.
Morgan said the bank offered a good example for IT directors
preparing for outsourcing.
The complex deal marks the most important step to date in ABN
Amro's Group Shared Services (GSS) programme, plans for which were
revealed late last year. The multi-layered arrangement encompasses
in-house consolidation, partial outsourcing, multi-supplier
strategies and offshore outsourcing.
ABN Amro has been making preparations for the contract for at least
two years, and analysts have expressed confidence that it will be
able to manage its multi-supplier relationships. They said the
bank's GSS programme has paid sufficient attention to governance
issues to retain control of the relationships in the years
ahead.
The bank could drive value from its IT service partners because of
continued competition for work between them, said Ovum consultant
Samad Masood.
Because Accenture, IBM and Indian suppliers Infosys, TCS and Patni
can all bid for application development work under the deal, the
bank could retain sufficient control without burdening projects
with additional bureaucracy, Masood said.
Under the deal, IBM will from November assume management of most of
the bank's global IT systems, including servers, storage and
desktops.
The exception to this arrangement is the IT infrastructure of the
bank's business unit wholesale clients, which was outsourced to EDS
in 2003.
The deal will radically change ABN Amro's IT staffing arrangements.
Of the 5,000 or so IT staff employed by the bank worldwide, about
2,000 will be transferred to the five named suppliers, with IBM
taking on the bulk of these posts. Within 18 months, the bank
expects to have halved its remaining in-house IT staff to
1,500.