Case #4

Global Outsourcing of IT

Problem

Large Consumer Products Company with over 100,000 employees around the world outsourced its Information Technology Systems to a well known IT outsourcer. It was one of the biggest outsourcing contracts ever signed. The ten year contract, worth billions of dollars, was over a foot high. Over 2,000 employees were transferred to the IT company.

After one year, signs of stress were showing. No one working on the outsourcing management team had read (or wanted to read) the contract, for it was inflexible and already out of date. The customer was not getting the results they needed as business conditions changed and new acquisitions were about to be made, which would further stress the relationship. And the outsourcer’s long-term prospects for profitability on the contract were getting bleaker.

Solution

Using our Engines of Innovation Best Practices, we first designed a strategy with both companies to transform their relationship from a tactical, transactional, contract based arrangement to a strategic, innovative, principles-based alliance.

 

A new, innovation-based, win-win business model was designed to create a powerful engine to drive lower costs while simultaneously enhancing strategic flexibility as global business conditions warranted. Both companies made a powerful commitment to each other’s need to innovate to win.

 

Knowing that changing the contract would take months, if not years, both companies instead designed a set of Operating Principles that would keep the alliance regenerative through a continuous stream of new innovations.

Results

Both companies cite significantly higher satisfaction with the new Innovation Alliance.

Shortly after the transformation, the Consumer Products Company made a major global acquisition, and, using the new Operating Principles, has begun a seamless integration of the acquired IT systems.