Vodafone expects to reduce its annual £560m spending on application development and maintenance by 25% from next year, under its outsourcing 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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