IT directors should be prepared for two years of business
disruption when they
outsource IT services.
This warning comes from Michael Paravicini, chief information
technology officer at
Zurich Financial Services, who has spent the last five years
managing Zurich's world wide outsourcing contract.
Zurich Financial Services began a major IT programme change in
2003 to centralise IT and outsource non-core functions.
The company awarded IBM a contract for desktop services to
support 75,000 PCs (now run by CSC)
Equant took over wide-area and local area networking together
with fixed and mobile telephony services. CSC, Accenture and Wipro
took over application development.
Speaking at the Gartner outsourcing and IT Services Summit in
London yesterday, Paravicini said the company faced barriers during
the five years transition.
"We faced significant business disruption because when we
centralised IT, we lost some key skills and their was a gap between
the business and IT."
Simplifying the PC environment was also difficult, he said. "We
under-estimated people's emotional attachment to their desktop
PC."
End-users had difficulty adjusting to support staff who spoke in
a different accent, when Zurich tried to centralising desktop
support in Ireland.
Paravicini recommended that IT directors who want to centralise
network services, look for a global networking provider, rather
than use telcos in each country.
"Had I chosen Swisscom in Switzerland, we would have probably
used Cisco hardware France Telecom would have supplied us with
Nortel equipment and in Germany we would most likely have been
given Avaya. I needed a system integrator who could provide a
common platform across all countries."
It is important to retain some junior staff, along with
business-facing IT staff such as chief architects and business
analysts for application development, said Paravicini.
If Zurich had outsourced all its junior jobs there would have
had no one left internally to pick up some of the more technical
programming work.
Paravicini said he has seen big improvement in the five years
since Zurich changed the way IT is managed. Zurich now manages 45%
less IT infrastructure and the IT department has 60% less staff,
and Paravicini has reduced the number of datacentres from six to
three.
Zurich has improved IT service availability. Paravicini said,
"In 2003 we had 80 critical IT outages per month. Now we only have
two to three."
Paravicini recommended that IT directors set the expectations of
business leaders to reflect the difficulty in getting outsourcing
right.
"Had we spent more time working with the business, we would have
been more effective with our outsourcing contracts," he said.
Zurich's outsourcing tips
Ensure the business understands the risks
Expect two years or more of disruptions
Don't underestimate end-user attachment to their desktop PCs
Use a global network provider, because integrating technologies
from
local telcos is extremely difficult