The unusual enhancement to the contract will mean MG Rover spends the same as it would have done maintaining its legacy systems but gets the benefits of moving 39 applications from main- frames to a Compaq/Windows 2000/IFS ERP infrastructure.
When all the applications have been migrated, MG Rover will make substantial annual savings by not having to maintain a complex legacy environment.
Steve Walton, business systems manager at MG Rover, said, "For three years we pay CSC what we would have paid to maintain the legacy. But within half that time we complete our ERP implementation and exit the mainframe. Our objective is to be off the mainframe by Q4 2004."
The contract will not involve any transfer of staff to CSC. Walton said more work will come in-house as CSC is relieved of its code-cutting duties as the legacy environment is phased out.
Bob Aylott, principal consultant at outsourcing specialist Orbys, said the spotlight had to be put on CSC's motivation to sign away existing mainframe maintenance revenue. "It is important to ask: what are the incentives for CSC? It could be seen to be doing itself out of a job," he said.
"It is important to question how the supplier is going to make its money in the long term, before signing a deal."
Walton said CSC would benefit from an improved ongoing relationship with MG Rover if the deal succeeds. "CSC staff work on troublesome legacy technology that does not fit the current business need, let alone what we want for tomorrow," he said. "They recognise this, as do we, and the relationship at times is stretched because of this.
"CSC knows we will move away from mainframes over time and it could be left with nothing. It is taking the opportunity to accelerate our strategy, please the customer and be ready for a continued healthy relationship."
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