Liquid innovation at Scottish Water

Scottish Water is turning its outsourcing partners into innovation hubs. In April, the publicly owned company announced a series of contracts worth £120 million for the delivery of operational IT services with Fujitsu Services (for service desk, desktop and infrastructure services), Tata Consultancy Services (for applications management and integration and BI development) and BT (for mobile, data, voice and networks).

An earlier phase of the programme saw ATOS Origin, Fujitsu, Logica, SAIC and TCS engaged as ‘framework partners’ for Scottish Water’s rolling programme of capital expenditure on application development projects.

But the company is counting on those vendors to play a big role in the innovation it sees as crucial to growth, boosting efficiencies and increasing competitiveness.

As David Brown, general manager for IT at Scottish Water, says, the package is designed to “deliver significant cost savings and an enhanced service, and to exploit the extensive development capabilities of some of the most innovative companies in the business”.

And there is nothing casual about that arrangement; those companies are expected to deliver on innovation.

Leveraging a new IT infrastructure created after its formation as part of the merger of three of Scotland’s main water authorities in 2002, the organisation has now established a service delivery model (inspired by Gartner’s IS Lite model) that uses a much-reduced group of key suppliers. Those moves support three key themes, says Brown: the enhancement of services to support 24/7, 365 days a year operation; to reduce IT costs; and to “create a scenario where we could drive innovation into the business”.

Savings were key, says Brown, but “the innovation piece is massively important to us – it is baked into the contract.”

“The essence of these contracts is much more than just about service. We are integrating these companies as partners within our delivery model. Notwithstanding that, we are establishing a formal Innovation Forum that will bring together key business people in Scottish Water with senior people from our new partners.”

The formal structure behind this involves quarterly meetings in which the business executives lay their challenges on the table. The service partners’ job is to work to deliver to those aspirations, with a risk/reward programme recognising developments that create value for the business.

But Brown resisted pressure from Scottish Water lawyers to make the Innovation Forum an obligatory part of the overall governance.

“I want it to have its own contractual structure, and something that the partners would want to do rather than be forced to do. Because we are trying to create an ambience there that is genuinely about wanting to innovate, wanting to push the envelope, with opportunities there for the partners too.”

The arrangement is structured so that if Scottish Water chooses to do a particular project that emerged from the Innovations Forum then the value derived from that is shared with the partners.

Further reading

Offshore 2.0 The first wave of offshore IT was all about lowering costs. Now organisations are looking to their sourcing partners for technology and business process innovation

Infosys – The human pyramid The Indian IT pioneer is grappling with the challenge of changing from service provider to an innovative business partner

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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