Outsourcing: Slow and Steady

Procter & Gamble's outsourcing deal with HP has used a stable, no-frills approach to make the consumer-product giant's technology infrastructure more efficient. (Baseline)

Procter & Gamble chose a simple strategy for the first year of its $3 billion technology services outsourcing pact with Hewlett-Packard: Dont screw it up.

No major restructuring of services or staff out of the gate. No high-cost implementations of new services or software. And, in particular, no interruption or degradation of the technology for supporting call centers and for managing its networks.

The go-slow strategy came after a whirlwind courtship that ended when Hewlett-Packard-not Affiliated Computer Services or Electronic Data Systems-became P&Gs key computer services contractor on August 1, 2003.

Linda Clement-Holmes, manager for global business services infrastructure and information-technology governance at P&G, says the strategy was born out of necessity.

It took just 94 days for the HP outsourcing pact to go from request for proposal to signed contract. Then, within 90 more days, HP had to absorb P&Gs three data centers in Cincinnati, Singapore and Brussels, 2,000 employees, its network infrastructure and its technical contracts.

With a 10,000-page contract and about 3,700 tasks to hand over-involving everything from network administration to payroll to mainframe management-P&G and HP determined it was too risky to change so much so soon. The companies adopted a "where is, as is" strategy in which HP initially just put P&Gs technology operations and workers on its books.

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"Granted, we were pushing off savings a bit, but our main goal was to cut over and maintain a stable environment," Clement-Holmes says.

P&G is currently in a multiyear "transformation" that calls for HP to absorb P&Gs technology infrastructure and make it more efficient, according to Clement-Holmes. The key tasks are revamping business processes and helping P&G effectively deploy wireless computing technology and radio frequency identification tagging. P&G evaluates HPs performance quarterly using criteria such as network uptime, data center availability and response time on complaints. Qualitative measures on customer satisfaction are developed by polling business-unit heads who deal with HP on an ongoing basis.

"We want to take it beyond the service level agreements," Clement-Holmes says. "You can have great SLAs and unhappy users and clients."

These measurements are reviewed at the highest level of both companies. Ann Livermore, executive vice president of HP Services, and Filippo Passerini, P&Gs chief information and Global Business Services officer, each gets a copy.

Clement-Holmes wouldnt say how much P&G expects to save or how much savings HP already has produced, but says shes satisfied with the setup. HP has integrated much of P&Gs operations such as its data and call centers around the world, mainframe management and network monitoring systems. Meanwhile, HP has absorbed 98% of P&Gs 2,000 technology workers. HP isnt finished taking on P&Gs infrastructure, but the company is "well along on that path," says Dan Talbott, HPs client manager for P&G.

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