Global chemical company Ciba has cut its IT costs by over $15m a year after moving away from producing all IT services...
internally to using a number of sources.
The savings from the Ciba's first foray into outsourcing - which took 24 months to complete - equate to about 20% of the costs of the outsourced services.
Erwin Becher, CIO at the company, said Ciba has moved to a model that mixes internal and external support from different suppliers.
"We made the decision to implement a sourcing mix and move from internal delivery to selective sourcing," he said.
The company, which employs 13,000 people in 120 countries, identified non-core activities to hand over to external suppliers.
It uses Unisys to provide and suppport its SAP-based IT infrastructure, BT for its telecommunications, a mix of internal resources and outsourcer Satyam for its application development. It works with Dell, Microsoft, SAP and IBM for hardware and software services.
Ciba transfered 120 people to the service providers. The company now has 16 people dedicated to managing the outsourcer relationships. The retained staff spend half their time managing contracts.
Becher said that, although it was disappointing it took Ciba 24 months to move to a mixed sourcing model, the project now provides better IT services as well as the cost savings. "We have made the right decision in defining the sourcing strategy and choosing the suppliers," he said.
It took 18 months to transfer the communications services to BT and eight months to move application support to Unisys.
Some parts of the project suffered because the company did not always use a sourcing adviser, said Brecher.
He warned businesses doing this type of project to make sure they carry out and complete good due dilligence on suppliers and to avoid having too many subcontractors.
"The ideal is for the outsourcer to have no or very few subcontractors. "We want to check out every subcontractor," he said.