Dallas-based Dresser Industries had developed and nurtured a customer-sensitive spirit among the computer services team that provided mainframe support for the corporation. Users throughout the organization had become accustomed to the conscientious efforts of the computer services staff and their willingness to expend the extra effort and do the hand-holding to walk users through changes, upgrades, new hardware and software deployment. The picture told a happy story.
However, Dresser saw significant business changes on the horizon. Business units were looking at newer application technologies, operating on network and client-server-based platforms. They realized that any significant reductions in the current mainframe workload volumes could eliminate economies of scale. The resulting higher unit costs to provide services suggested that it was time to look at an outsourcing agreement.
A year or so earlier, JCPenney decided to spin off its mainframe-based financial services group, BSI, now known as Alliance Data Systems. BSI was looking for a site to accommodate their operations. Coincidentally, Dresser’s facility had about half of its raised floor space available, so the groups discussed the possibility of BSI’s relocating to Dresser’s facility. Eventually, an agreement was reached, and BSI became a customer of Dresser Computer Services (DCS).
When Dresser decided to study outsourcing, Jim Peiffer, computer services manager, and several divisional and corporate information technology executives were assigned to conduct the outsourcing study. They solicited bids through a formal RFP process. Because of the existing relationship between the two companies, Alliance became one of the bidders.
As Dresser began the process of documenting its existing services and service-level requirements, it was clear that there were several key objectives beyond the basic specifications. First, Peiffer knew that it would take an exceptional team of computer services personnel from an outside provider to manage a smooth transition among Dresser’s users, and he doubted anyone could effectively duplicate the spirit of friendly support and attentiveness that his existing team had developed. So one key objective was that any outsourcer would have to pick up all of the existing Dresser computer services team.
Additionally, significant effort was made to document current service levels and assign importance-weighting factors to each. The team then developed a matrix that clearly defines the responsibilities of each party. With those issues resolved, Peiffer hoped the move to outsourcing would hardly be noticed by Dresser users. There would be no period of education and getting to know new support staff or learning new operational practices.
Alliance Data Systems reviewed the service level specifications and agreed on a package of penalties and incentives. The Alliance Data team would have the benefit of an independent site from which to operate, room to grow their operations, a new client and a team of experts to serve existing or new businesses. In addition to service levels for reliability and performance in batch, on-line, and networking services, Alliance Data and Dresser agreed to a number of operational service levels designed to bring the best practices to their operations.
First, the parties agreed that communications was among the most important elements to a productive, professional working relationship. There are monthly project and status reporting meetings, supplemented by on-demand meetings as required. Communication is further enhanced by weekly and monthly roll-up reports on the overall operations. Each organization has three persons on a joint steering committee that meets quarterly to oversee the entire partnership. And finally, the Alliance Data team presents Dresser regularly with ideas and recommendations for information technology improvements and applications that will help Dresser’s core business operations.
Problem resolution and managing change aren’t left to chance, either. Alliance provides on-line systems to request hardware and software changes and maintains the schedule DCS had provided. Since personal service has been a hallmark of the Dresser unit, technical support and help desk response times continue to be important so that users can expect the same or even better response than they received before. Software release management will keep Dresser on the leading edge.
The new relationship has been working well since July 1997, with positive results and a few unexpected benefits for both parties. Alliance has upgraded Dresser’s CPU and DASD storage devices, migrating them to newer technologies. The IBM CMOS processor is 50 percent faster, and plans are underway to replace older tape storage in Dresser’s operations.
The service levels and descriptions have been through their first review after four months, and most of the changes involve moving away from operational issues to more strategic ones. These reviews are mandatory at least annually, but are occurring at more frequent intervals.
Service levels also are monitored informally by Dresser through regular telephone and personal contact with users and through user group feedback. A formal survey will be completed by Alliance within 90 days to establish and quantify baseline user satisfaction. Then annual follow-up surveys will monitor progress and identify areas for improvement. Additional plans call for an independent benchmarking service to help ensure competitive service and rates, in addition to ensuring that Dresser and Alliance are getting the benefits of best practices and are staying abreast of the latest technologies.
Peiffer summarized the current situation by saying, ” Keeping all of our staff was very important to us, both from the human resources side and to ensure consistent service levels. Everyone seems to be happy with the new arrangement. We have been pleasantly surprised by how smoothly the hardware upgrades have been implemented. Alliance Data has further responded to our service expectations with the appointment of a new, full-time dedicated account manager. We are looking forward to even more positive results for the Dresser business units.”
Lessons from the Outsourcing Primer: