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Outsourcing without tears

Outsourcing without tears

As if a move to an outsourcing model wasn’t enough, AMP decided to upgrade and move to new premises at the same. Thanks to Mark Ennis and Paul Jones, it all went smoothly…

AMP made the decision last year to outsource its back-end processing. “We’d done as much as we could with our current model and we had to take things to a new level,” says Mark Ennis, left with IT operations manager Paul Jones, general manager of professional services and a director of the insurer’s New Zealand business.It was something AMP had not previously been involved in and the decision to outsource suddenly became much more complicated when AMP decided to move premises, from its venerable old buildings to HP Towers in Wellington’s Featherston Street. Ennis became the project sponsor for the total move, dealing with everyone from architects and construction companies to technology partners.

“There was a series of different work streams,” he says. “Logistically it was very complicated. AMP hadn’t been through a move like that.”

IT was the most vulnerable point of the move, with the most potential to cause problems for the day-to-day business if anything went wrong. The outsourcing contract fell under the purview of Paul Jones.

CIO interviewed Jones to follow the steps of what eventually proved to a successful and no-pain exercise.

The decision to proceed with the outsourcing contract, signed with Computerland, was made in September last year and the move was completed a week before Christmas.

Jones says the time that went into pre-planning was the key. “There’s an old political aphorism that if you’re going to take 10 hours to cut down a tree, you’d better spend eight hours sharpening your axe,” he says. “Because of the building move, we had a non-negotiable time-frame.”

AMP had an existing relationship with Computerland, which had earlier installed its Storage Area Network. Jones says he reviewed several interested parties and he was keen to have an outsourcer that wasn’t too big. He wanted AMP’s needs to feature prominently on the outsourcer’s radar. “Computerland excelled in its account management and the way the company was represented. I felt it understood the real principles of partnership, something that is important to us. We had aligned agendas.”

Both he and Ennis are adamant that the most important part of the project was the people involved. Says Ennis: ‘You must get your people right and make sure your partner has a similar culture and philosophy.

And Jones: “Management of people is the most important thing. You have to engage and have a we attitude. There’s always ownership of territory, and people have to be encouraged to let go of that.”

AMP chose to shift its computer room rather than build a facility in the new building. That meant Computerland had to fast-track the rebuilding of its computer room in parallel with the move. Jones says that was almost invisible to AMP. Thirty servers were decommissioned before the move, which involved 82 servers (including blade infrastructure), an HP EVA 3000 SAN, the network infrastructure and DMZ, web. “Part of the rationale behind outsourcing was to enable us to better measure total cost of ownership,” Jones says. “From the user point of view there was no room for slippage in the project because it was the end of the financial year.” He says that during the pre-planning, there were three decisions that had to be made at a generic level:

X “Did we want to rebuild the data centre?”

X “Should we take advantage of the really good facilities emerging for hosted platform management?”

X “Should we outsource to the full degree and seek someone who could entirely manage the infrastructure?”

Jones says AMP did high-level analysis with all of these options. “We chose the third option because of the complexity of our environment, which includes Notes and Citrix, and we wanted to employ better monitoring tools such as Tivoli.We thought we’d get economies of scale. At AMP we had technically competent staff but single points of dependency. Obviously, with an external party we could leverage that.” That decision was worked through within a month.

Jones says AMP didn’t go to an open tender but went through a rigorous process by inviting bids from companies that could fit the requirements. “We considered five organisations and spoke to three. Earlier, we had been out for a preferred supplier for equipment and services, so we could build on that. All this was reviewed when the outsourcing decision was made. We chose Computerland because of its excellent account management and understanding of our business processes. Its bid was also helped by its earlier successful project delivering the SAN.”

He says the biggest worry about any outsourcing decision is continuity of business and the transfer of intellectual property. “The supplier needs to understand the business drivers and how you handle affected staff. We had had some staff resignations before making the outsourcing decision and, rather than replacing them, we back-filled with contractors from Computerland. At the end of the project, only two staff were directly affected.”

The project was not begun till an audit was done by Computerland, which AMP funded.. Jones says the audit recommended some initial work be done before the shift. “We accepted that had to be done.Processes and documentation had to be up to standard before Computerland took over, so some work had to be done there, too.”

Jones says that the transfer of the infrastructure exceeded expectations. “Outsourcing the infrastructure was bad enough from a risk point of view, but we then had to add in re-cabling of the new building and engaging with other vendors -- telcos, Ericsson, for example -- and the re-linking of connections. The big danger was stopping the business. Computerland had set itself quite a challenge because the first part of the move had gone so well.”

What went wrong? “Nothing,” says Jones. “There were problems such as the businesses within AMP saying we couldn’t take down equipment, and given the time-frame this became critical. It meant we had to revisit the project plan several times. The plan had to be flexible, with an incremental approach.”

The 400 desktops, which run Lotus Notes, Microsoft Office and other applications under Citrix, were shifted first and reinstalled floor by floor with temporary provisioning of cabling. The servers were shifted over three weekends after the desktop move, with temporary connections back to the old computer room.

Jones says it was a challenge to coordinate the telecommunications providers’ ability with AMP’s needs. “We had allowed for rollback -- the ability to reinvent some aspects of the shift if anything went wrong. If some of the work hadn’t gone well, we could have done it on some business days, rather than at weekends, and throw in extra staff -- at a cost. But we didn’t have to do that. A lot of work went into the background so that there was minimal disruption to users. With the servers, we moved the less critical ones first. The critical stuff was the SAN and all its dependencies. We engaged with Hewlett-Packard to be part of that project. Computerland had used HP in the original SAN installation.”

A project team was established, including AMP and Computerland staff and other experts, such as HP. It met every week. “We had internal change control,’ says Jones, ‘For example, we had to provide things like testers in a timely manner for sign-off.To be successful, a project like this has to be based on a team approach.”

‘Having people who had worked in the back-fill positions helped, along with a Computerland project manager who managed the desktop shift and understood the dependencies. “We also appointed an AMP project manger, Marg Coleman, who was involved in the IT moves during the building relocation. She managed the things we wanted to do.”

What lessons and recommendations came from the project. “The first is the reinforcement of the principle that success is dependent on aligned agendas,” Says Jones. “It’s about creating an environment to ensure a project succeeds in a way that individuals don’t feel compromised and can handle change, which isn’t always easy for some. We had some scary moments when there was speculation that Telecom would buy Computerland. We didn’t know whether the culture would change. Computerland and Telecom were frank and open with us before the buy. We knew up-front, and we could be quite relaxed about what was happening.”

Jones says he probably wouldn’t do things “a hell of a lot differently” if he had to do the project again. ”The traditional approach is to go through the RFI/RFP process but IT has changed. You need to fast-track so you can minimise the learning process. From a user perspective, we tried to inform them of the complexity of the move. But you always run the risk that it goes so well they don’t understand what was required to bring it together. I was lucky I had a manager [Ennis] who had the responsibility of the whole move that IT was a part of.”

Jones says that as a result of the contract, Computerland has been asked to produce ideas that can reduce the total cost of ownership. ‘Our expectation is that Computerland will bring to the table better ways of reducing the TCO in an accountable and transparent manner.”

One of the keys of the contract was the openness of discussions involving margins. “There are broad provisions for benchmarking to ensure we are getting the best practical best practice, and there is the ability to revisit margins.” The contract is based on financial incentives rather than penalties. “We’ve tried to avoid penalties but provide rewards when things go well. The incentives are set out in service-level agreements and those agreements allow for flexibility in terms of the provision of the contract. We were fortunate enough to be able to call on AMP Australia to assist in legal and contract advice and to give this a short-term focus,” Jones says. “Our commercial manager, Jason Stace, played a key role in bringing this together.”

AMP Australia has a more comphensive outsourced IT operation. Jones says a similar model was considered but the local organisation decided it wanted to retain desktop support on the basis that, from an IT perspective, it should continue to understand the business needs.

“There were ancillary exercises such as ensuring software licences were compliant, and ensuring Computerland’s security provisions and practices were up to our high standards as a financial organisation, he says. ‘We’ve engaged them to prepare a separate security audit on us.”

For the future, he hopes the new ownership of Computerland will enable AMP to leverage other opportunities, “given the rampant changes in the IT industry”.

Mark Ennis, AMP director and general manager professional services, comes from a marketing and change management background. He has been nine years with AMP. Previously, he was with the Bank of New Zealand as marketing manager for small business. Before that he worked at NZ Post, in charge of franchising Post shops. He was the project sponsor for AMP’s move to a new building and outsourcing of its IT. Infrastructure

Paul Jones, AMP IT operations manager, is a 30-year industry veteran “involved in projects most of my life”. He spent 12 years at Philips, into the 1980s, as divisional manager of data systems. His next role was as regional manager of Paxus Services , then Tritec, the then IT division of the Department of Social Welfare, where he delivered the first service-level agreement between Tritec and the department. He then worked for Internal Affairs at ministerial services, where he retained the management role when the account was outsourced to Unisys. “My experience at Ministerial Services prepared me well to react to sudden change -- such as change in a Minister’s office -- with non-negotiable timelines.” More recently, he was service delivery manager at de cypha before it was wound back into Transpower.

A proud history

AMP has had a presence in New Zealand for more than 150 years. It has 357,000 customers, making it New Zealand’s largest insurance company and largest fund management company, with more than $10 billion managed. It is also the country’s largest retail funds manager with $5.3 billion managed. One in eight adults in New Zealand is a customer.

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