Vodafone expects to reduce its annual £560m spending on
application development and maintenance by 25% from next year,
under itsoutsourcing contract with EDS and
IBM.
The mobile phone company said last week it had set "aggressive"
targets for the seven-year deal, designed to reduce the costs of
developing and maintaining critical business applications. This
will be achieved by consolidating development work under way in 17
operating companies around the world.
"It is going to be a year of transition, so I do not expect to
get a 25% reduction in the first year. But after that, we do expect
it. And suppliers are suggesting we will get that," said Jim White,
Vodafone's director of global supply chain management.
The contract will allow Vodafone to simplify the way it manages
software development by reducing the number of suppliers it deals
with from hundreds down to two.
White said this would allow Vodafone to raise the quality of
software development to the same standard across the world, reduce
its time to market with new products, and eliminate duplicate
projects across different countries.
"We did not have a good strategy for application development.
Every country was doing what it was doing on its own," he said.
"We were very splintered. We had every supplier you can imagine
working for us, and we were not necessarily getting the best prices
for what was delivered."
Under the deal, signed last November,
IBM and EDS are taking over responsibility for
developing and maintaining billing systems, enterprise resource
planning systems and customer-facing websites.
White said it was too early to see the business benefits, but
said he was encouraged that four months into the project there had
been "no catastrophes".
Vodafone planned to retain hardware in-house for the time being,
although it might look at outsourcing in the future, said
White.
"We have a strategy to consolidate our datacentres and drive
cost out of the IT operations. That strategy is being implemented
and working well," he said.
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