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E.I du Pont de Nemours and Co. this week announced that it had extended its 10-year outsourcing relationship with technology services giant Accenture to include the worldwide implementation and support of an ERP system at chemical and related products company.
DuPont, after initially starting the ERP (enterprise resource planning) project within its own IT organization, chose to outsource the development of the system, which will touch most of DuPonts global operations.
Officials at the Wilmington, Del., company believed that having a single outside system integrator to lead the deployment of the SAP AG software would help to “achieve more effective business results at an improved price,” said Vic Norman, director of IT alliance special studies within DuPont.
“We were running the corporate SAP project. Over the last couple of years we made changes to improve the way the work is getting done and improve results,” Norman said. “We decided the next step was to select a single systems integrator for it…to get our suppliers on the project to have more skin in the game. We think this deal will give us significant savings and increase project discipline, standardization and accountability for results from Accenture.”
Under the contract, Accenture will implement the ERP system by the end of 2003, and then take on support and maintenance of it for a six-year term. Neither side would disclose the value of the contract, although Norman said that, “this is a large-scale SAP ERP implementation. The numbers are very large.”
Despite the existing outsourcing relationship and Accentures participation in the initial project, it was not inevitable that Accenture would win the contract. DuPont also evaluated a handful of other large professional services firms with global scope, but found Accenture had the best proposal for development and support of the global ERP implementation.
“What they proposed hit the mark,” said Norman.
Accenture will leverage its service delivery centers in Spain, India and Wilmington to implement and maintain the ERP system for DuPont.
“From a total effort standpoint, 35 to 40 percent of the work will be done at offshore facilities,” said Rick Embree, a partner in Accentures Chemicals Practice, in Charlotte, N.C. “Given the time frames and delivery targets we have to meet, being able to have Accenture people follow the sun is important.”
The ability to follow the sun in its service delivery model was key, Norman believes. “Their service delivery model overall was very attractive to us from a pricing perspective and from an execution point of view,” he said.
No employees will transfer from DuPont to Accenture in the ERP deal. A total of about 300 Accenture people will work on the project at its peak, according to Embree.
Despite the U.S. economic recession, commitment to the project from top executives at DuPont never wavered, Norman said. Although other companies during the past year have put major new projects on the back burner and have turned their attention to smaller projects that can quickly demonstrate a return on the investment, Dupont continues to forge ahead.
“This project remains through these difficult economic times still very high on the priority list for the company. Given the magnitude of the spending associated with this work it is on all our executives radar screens. It gets considerable attention and frequent review by everyone – including the CEO of DuPont,” said Norman.
Still, one of the goals in selecting an outside integrator was to reduce the projected cost for the project, he added.