Contract negotiation support for IT outsourcing

Feature image
  • Company: BipDate: 2009-2011Sector: Media
  • Customer: <Confidential>Function: Information systems
  • Type of project: IT management & governance; Strategy; Outsourcing; Process reengineering; Financial assessment; Organization redesign
  • My role: Outsourcing contracts negotiation responsible and part of the implementation support team

The customer, a Spanish international media group, had decided to completely outsource its IT and telecommunications services, and had also chosen two separate providers to execute these outsourced services. However, it needed to formalize the corresponding outsourcing contracts as soon as possible, so as to start the service transfer and start obtaining the intended benefits in the shortest term. Therefore, in a very short time frame (less than three months) an intense negotiation activity was carried out with the chosen providers to agree and contractually define:

  • The scope of the services to be outsourced (activities, working hours, locations, tools, etc.)
  • Service levels to be provided
  • Economic model (service units, baselines, penalties, billing, etc.)
  • Relationship model between service providers and with the client
  • Assets transfer (human resources, materials and existing contracts)
  • Service transitioning model

After preparing and signing the corresponding contracts, the work continued by supporting the customer in the transformation of its IT function, from an internal provision model to a completely outsourced model; as part of this transformation:

  • The organizational model of the IT function was redefined, both for the central organization and those in direct contact with the internal client, in terms of responsibilities and sizing
  • The processes to be executed were redefined to account for the outsourced provision model, including the centralised proceess control and the reporting and metrics definition
  • New tools were identified and implemented to support the newly defined activities, allowing a first automation level for them
  • An IT analytical cost model was implemented, that allowed the provision of information on costs for consumed services to the internal clients
  • Support was provided on the change management activities, by actively participating in the discussions with the different stakeholders (resources to be transferred, internal clients, unions, third party providers, etc.) to ensure an effective transition in the expected time frames

As a consequence of the outsourcing process the customer obtained the following benefits:

  • A better alignment of the IT function with the strategy and needs of the business
  • A great increase in the efficiency of IT resources
  • The creation of a single, global IT management model for the group
  • Positive financial results for the business, given the sale of material assets, the reduction of labor costs, savings on investment financing, increase on tax deductions from R & D activities and the variabilization of IT costs
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