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Scottish Water expects to save at least £1 million a year with its three-vendor global IT outsourcing program

In 2007, publicly owned utility provider Scottish Water was faced with the challenge of merging multiple regional authorities into a single efficient and centralised organisation. It was a mammoth undertaking that would require a major rejuvenation of IT systems and infrastructure to support the new business.

That led to the need for a sustainable and effective IT services model, delivered on time and on budget, and given the critical nature of the infrastructure being managed, capable of delivering 24/7 services every day of the year.

It was a gruelling requirement that the organisation’s general manager of group technology, David Brown, quickly saw would benefit from the significant involvement of outsourced and offshore partners.

“When we kicked off the selection process, 104 companies showed interest, which was a very healthy number,” he says.

Over 60 companies made it to the pre-qualification stage, 35 of which submitted a pre-qualification questionnaire by the May 2007 deadline, leading to an eventual shortlist of 12 who were offered an “invitation to negotiate”.

This intensive process was necessary because “in the public sector, we are obliged to follow EU processes; we can’t really take any shortcuts,” says Brown. He adds that there was also a political element, as the contracts had to recognise the Scottish government’s endeavours to award public sector contracts to Scottish businesses.

Just under a year later, deals were signed with Fujitsu (service desk, desktop and server infrastructure), Indian IT services firm TCS (application management, integration and business intelligence) and BT (voice and data communications).
This matrix of deals makes considerable use of the suppliers’ offshore facilities. The IT service desk is delivered from Fujitsu’s Lisbon centre, applications management and development comes from TCS in Calcutta, and remote infrastructure management is delivered by Fujitsu from Derry.

“It’s a collaborative model, and the three are expected to work together,” Brown says. “There was a desire on the part of the [business] owners to promote competition.” At the same time, the model encourages innovation, “the financial benefits of which will be shared with partners,” he explains, with a number of initiatives currently being evaluated prior to implementation.

The result of such a heavily outsourced arrangement, Brown acknowledges, is that his role has become one of contract management as much as technology provision. It was worth it, however; Brown estimates the financial benefits to the business will run to a minimum of £8 million over eight years.

“If we’d done it ourselves I reckon it would have cost an extra £2 million a year,” he says. In the first year of the new regime, Scottish Water has also been able to reduce its contract staff from 97 to 19, “with further reductions possible this year”.

But setting up such a complex outsourcing operation was not without its challenges. Drawing up cross-border contracts was particularly difficult, Brown says, and required the legal services of Equaterra (formerly Morgan Chambers).
“I would never dream of trying anything like this without bringing in [legal offshoring] expertise,” he says.

Another obstacle to the program was detected early during site visits to the offshored sites: the Scottish accent. “Obviously, the language barrier can be a difficulty,” he chuckles.