Morrison Utility Services outsourced the development of a business-critical system because its in-house resources were not set up to react quickly to business requirements.
The company, which lays pipes and cables on behalf of utility companies, signed a £3m contract with Indian-based Zensar Technologies to develop its work and cost management systems, which process client requests from start to completion.It made 12 people redundant in its development team.
Moving to an outsourced IT model was the only option because the development resource was too slow to react to business requests, said Graeme Cross, head of business systems development at Morrison Utility Services.
The firm's work and cost management systems were developed using Visual Basic and SQL and were around 10 years out of date. "We had made many enhancements over the years but were finding that just making one change led to many unexpected consequences," said Cross.
Morrison wanted to overhaul the system to take advantage of web based and mobile services. The previous team did not have the skills set to implement such changes. It decided not to re-train staff because it would have taken too long.
Zensar developed the new system on top of Salesforce.com's Force.com platform, providing "a blank sheet to develop new systems".
"We are able to respond immediately to clients and legislation. In the past even the smallest request would take several months to deliver - now we are able to sit down with customers and assure them that they'll see something by the end of the day."
He said there was a major shift in development culture when the company outsourced. "The [in-house] team were doing good work, but they didn't manage expectations well. Outsourcing helped us to improve on that. Now when we ask for something not only do we get it but everything is documented and detailed. In the past it used to be a bit shoddy and reactive, but now we have fixed procedures and processes in place."
Morrison Utility Services digs one in five holes in Britain's roads and needs a system which presents information in a clear and precise way, providing alerts if workers are in danger of overstaying their allotted time and incurring heavy fines, said Cross.
The company has also made cost savings of around 30% to 40% by cutting overheads. In addition to money saved in IT labour costs, it has also reduced spend on admin staff by around 20% due to increased efficiency and cut project costs by using fewer contractors.
Cross said lowering cost was a major factor in his decision to outsource, but wasn't the main reason. It will save £500,000 in three years. The new model provided flexibility, allowing it to increase and decrease the number of developers it uses at any one time and access to skills its in-house team simply didn't have, he said.
"To be honest I haven't found one disadvantage of moving to this model," said Cross.
Outsourcing let alone offshoring development of core business systems is a big step for any business. Although lowering costs is always a major factor in such a decision, flexibility and access to skills are long-term benefits.