MG Rover's IT department believes it can cut £14m from its annual budget for 2000 by 2007 without reducing service to the business.
The car manufacturer, which has withstood a rollercoaster of ownership changes, will slash the number of legacy systems and simplify support to achieve the massive savings.
Peter Vetch, IS and e-business director for MG Rover, said the IT department will move from a vast number of legacy systems to a single ERP environment, reduce support costs for bespoke application interfaces and rationalise hardware and software support.
He estimated the IT department annual budget will be about £16m in 2007, down from about £30m in 2000. About 60% of IT spend had been dedicated to fixing faulty interfaces on its legacy ERP system.
The largest cost savings will come from integrating a myriad of legacy systems, including IBM mainframe, Dec Vax, HP3000, HP9000 and Compaq/NT, into a Compaq, Windows 2000, Oracle and ERP system from IFS. This will slash the heavy support costs incurred with maintaining systems, which are up to 20 years old.
Nine e-mail systems, including cc:Mail, Lotus Notes, All-in-one, raw Unix mail and multiple copies of Microsoft Exchange, were ripped out and replaced with one instance of Exchange.
The legacy environments date back to the company's days as the nationalised British Leyland, the Rover Group and finally as part of BMW.
In the demerger that created MG Rover, Land Rover and BMW Mini, the IT department had to split business systems that had existed when it was one company.
This history of privatisation and changing ownership is common in the UK industrial and utilities sectors and has presented a major challenge for IT departments.
Nigel Montgomery, an analyst at AMR Research, said, "One of the problems MG Rover used to have was that IT systems were implemented at departmental and functional level so by re-engineering at an enterprise-level, rewards can be gained. Any successful IT project has to align with business objectives."
Vetch said the legacy set-up was not fit for purpose and was too expensive to run. "Re-engineering using bespoke or best-of-breed solutions was not affordable and outsourcing was inappropriate because we could not trust anyone else to know the business sufficiently well. So a single core solution was deemed the best way.
"There is no substitute for knowing how the business works and getting buy-in from the people in the business."