Rick Bacon, managing director of UK-based IT services company Parity Group, recently found himself in a tricky situation that will be familiar to managers in many other organisations. From offices in Dusseldorf, Germany, he was unable to log onto his company’s server in the UK in order to access files required for an important presentation the next day.
According to Bacon, however, this will not be a problem in future for managers at Parity: in December 2002, the company signed a five-year, £15 million deal to outsource its IT hardware and telecommunications infrastructure to communications and IT services company BT.
The rationale behind the pan-European deal is simple: Parity has been hit by the slowdown in technology spending and is under pressure to cut costs. BT was able to offer a more cost-efficient, reliable and secure network infrastructure than Parity’s own in-house IT staff could provide, Bacon says. “Our skill is delivering technological applications to clients based on application support management. We do not provide network infrastructure activities,” he explains.
Bacon claims that Parity can slash its infrastructure management costs substantially by using a single supplier, BT, to host its IT and telecoms infrastructure across its European operations in the UK, Germany, France, Switzerland and the Benelux region.
From February 2003, any of Parity’s European staff will be able to remotely dial into its corporate network from a laptop via one of BT’s UK data centres, says Bacon. The flexibility to scale its network up or down was another critical component of the deal: Parity recently closed two of its UK offices, but has plans to open a new one in Belgium.
Speaking at the Information Age Empowered Enterprise conference in January 2003, Bacon explained that having access to other technologies from BT should enable Parity to further trim costs. For example, the company has plans to use BT’s web conferencing services when pitching a contract, instead of travelling to a sales prospect’s site.
Furthermore, Parity’s partnership with BT will also enable it to offer its customers with a broader range of services. In particular, Parity plans to use BT technology to provide customers with remote access over the Internet to its IT training courses, and e-learning applications, using technologies such as broadband and thin-client software. At present, Parity provides IT management and skills courses to 40,000 customers each year at several centres in the UK. “Clearly providing all of this training at physical locations is costly,” says Bacon.
But large, wide-ranging outsourcing deals are notoriously complex to put together. Even the preparatory stages are taken up with time-consuming activities such as assessing requirements and conducting equipment inventory audits. Protracted contract negotiations are the norm, and getting board approval for a slated deal can be a struggle. Arguably the most arduous part of the process is getting supplier and customer to agree on service level agreements, says Bacon.
They also involve a large amount of risk. Bacon admits that Parity took about a year to make its final outsourcing decision. But ultimately,he says, “no matter how long the process takes, [it’s far better to] get it right first time.”