Guiding the Transition to a Multi-Provider Application and Infrastructure Environment

Executive Summary

An oil and energy company delivered services using a staff augmentation model, and lacked global, underlying IT processes among its operating regions. It determined its best solution was to outsource its applications and infrastructure support to two separate third-party providers, both of which were capable of providing the full IT portfolio. The company tapped Everest Group’s expertise to manage the entire cycle from initial provider identification through transition. The firm served as liaison between the client and its two providers, developed a detailed transition plan that included interdependencies between the providers, built support for and acceptance of the transition among key stakeholders, and managed complex regional compliance and regulatory requirements. The client now has a sustainable and flexible standard global environment, with a vastly higher quality of service, for a cost that is no more than the previous environment.

The Client’s Challenge

A Canada-based oil and energy company had grown by acquisition, and each of its three regions – North America, the U.K., and Malaysia – were functioning as highly independent, internally run operations with their own IT systems and processes. Additionally, 70 percent of its IT staff members were contractors, rather than full time employees. Recognizing the negative impact the lack of homogeneity and internally-owned knowledge was having on its competitive capabilities and its balance sheet – e.g., it was unable to understand its total costs as it didn’t have a single source of information for financial results – the company realized the need to establish and implement common and sustainable underlying processes across the globe, and leverage a scalable infrastructure that would enable it to grow more freely and aggressively.

The company determined its best course of action was to establish a multi-provider outsourcing environment in which one provider would assume responsibility for applications support and another would handle IT infrastructure.

Insight to Action

The client initially engaged Everest Group to manage the entire transaction cycle from provider identification through RFP development/preparation/distribution/ evaluation through contract negotiations. After successfully completing that engagement, the client asked Everest Group to assist in managing the transition of applications and infrastructure to the two selected providers.

Given the greater complexity of a multi-provider environment, Everest Group brought in additional resources to work with the client’s transition manager. The firm served as the single point of contact liaison between the client and the two providers, and crafted a transition plan that addressed the role of both providers, as well as their interdependencies. For example, the client had 1,700 applications, and Everest Group worked to divide support for those between the application provider and the infrastructure provider. Additionally, as documentation on utilized applications and assets such as servers and desktops was meager, Everest Group led a detailed internal due diligence to ensure proper identification and tracking.

Because the client was intent on a very aggressive transition timeline, there was not sufficient time to obtain pre-transition buy-in from all the appropriate stakeholders. To eliminate resistance, Everest Group took on a missionary role, working with each of the client’s business units to gain acceptance of the new environment. Everest Group was also directly responsible for the relationship with the two providers, and provided significant advisory assistance to the client’s IT leadership, which enabled early identification of potential issues and process changes to resolve them before they occurred. To further guard against issues negatively impacting the transition, Everest Group established a multi-provider council wherein both providers and the client initially met weekly to discuss sticking points, hurdles that needed to be overcome, problems among the parties, etc.

Other complexities also required careful management from Everest Group. The client’s Asian organization was a joint venture with a national oil company, so government approvals were required at each step along the way. Additionally, the transition plan had to address TUPE regulations in the U.K., and other regulations in other European countries.

Impact

First and foremost, Everest Group’s IT and energy industry expertise enabled the client to meet its highly accelerated transition timeline, and achieve standardization and documentation among its processes and procedures throughout its global operations, despite unique regional regulatory requirements and resistance from the operating groups.

Additionally, as the new outsourced environment represented such a major operational change, the contractual agreements with the two providers needed to be highly flexible in order to ensure establishment of the most advantageous and beneficial structure. Everest Group’s negotiation skills resulted in contracts that allowed the requisite flexibility, while simultaneously meeting the client’s objective of creating savings sufficient to cover transition costs and make it a break-even proposition.

Moreover, Everest Group worked with both of the providers to perform a comprehensive infrastructure optimization and application rationalization assessment; this not only enabled the client to streamline and enhance its IT operations but also paved the way for it to move ahead with its plan to lease and move into three new global data centers before 2012.

Going forward, the client’s expenses will be consistent with its old environment, but it will benefit from a new, standard and sustainable global environment with quality of service vastly higher than it was prior to transition to the outsourced model.