1998 Editor’s Choice Award
From the editor – At InfoServer, we like to emphasize the emerging role of niche or specialized outsourcing, in which a supplier provides a specific service to a customer. The ING Barings/Compaq relationship is an excellent illustration of this phenomena. Here we have Compaq leveraging its economy of scale and process expertise in the field of call center and help desk to provide ING with highly cost effective service. This relationship is an outstanding example of the value both companies receive by contracting for and providing specialized services.
ING Barings is an investment bank which provides banking services and securities operations globally. Two years ago, in January, 1997, the company decided to outsource management and first level support of its help desk function in Hong Kong. The outsourcing decision was part of an organization-wide fast-track upgrade project for their equity business. ING Barings selected Compaq-Digital Equipment Corporation and signed a three-year agreement. That initial decision launched a relationship that is setting new standards in niche outsourcing.
“That was two years ago, and the agreement has evolved so that Compaq now runs our help desk throughout Asia from three sites: Hong Kong, Singapore, and Tokyo,” according to Chris Yeats, head of technical services for the Asia region of ING Barings. But the evolution didn’t stop at the help desk. “Since then we have added on computer operators so that Compaq manages our database support and day-to-day operations in our Hong Kong data center,” Yeats adds. They also manage inventory, and just about every part of IT except application development.
ING continues to find other specific roles for Compaq to fill. “We wanted a VAX machine to run a test environment for Y2K remediation, and we rented the equipment including maintenance from Compaq-Digital Equipment,” notes Yeats. Because Compaq obviously knows the equipment and operating system backward and forward, it made for a neat arrangement that allowed ING Barings to concentrate on the core strategic work of sorting out Y2K issues without wasting time on hardware and systems.
The relationship dovetails with the bank’s overall outsourcing strategy. “We see outsourcing as a way to free up our own staff to look at strategic direction and concentrate on projects that drive the business forward,” observes Yeats. The firm looks for any operational process that can be written and performed repeatedly as a potential outsourced function. Help desk functions, which rely on fairly standard knowledge of hardware platforms and software systems are a good example.
The agreement with Compaq also delivers what Yeats sees as three other benefits of outsourcing, a fixed cost basis for the term of the contract, staffing and career development. Says Yeats, “If you staff the function yourself and people resign, you incur recruiting, hiring, and training expense.” In a help desk role, people can get bored with answering the phone after a while, and they want something else. “I think what you can do by outsourcing is offer a career path within that organization, and I know that’s the case at Compaq,” notes Yeats.
Since ING Barings has standardized on Compaq personal computers in Asia, and the banking business relies on Tandem hardware (owned by Compaq), their familiarity with the bank’s hardware platform was an obvious advantage. But ING Barings insisted on a provider that would be neutral to whatever hardware the organization selected, and be able to deliver flexible, scalable services.
“We were able to leverage our existing relationship, but we are not locked into buying Compaq equipment,” notes Yeats. “We were looking for people who could provide us flexibility and provide scalable solutions, and that means they have to be able to get people in quickly who can do the job,” Yeats adds. Digital Equipment already had experience in finance and banking, so combined with their technical knowledge, they were the logical choice.
Delivery Beyond the Contract
Flexibility and responsiveness have been important from the beginning. Compaq has responded to requests for short term staffing, project assistance, hardware provision, Internet file technology expertise, and a variety of other requests from ING Barings. Observes Yeats, “They understand our environment. They come in and do things quickly because their staff can advise the technical staff what is required and how it is all going to work together.” When there’s an inquiry about providing a resource, the response is typically, “How many people do you need, and when do you want them?”
More Than a Contract, An Understanding
The relationship began with a very specific service level agreement, but part of what Yeats wanted was the flexibility to go beyond the contract for additional support. “I believe the relationship is organic; it is always going to be growing,” he says. “You can have a contract in place and people will work through a contract, but we want things to be wider than that so there is no question about is it my job or your job; let’s keep the clients happy. Because it is a partnership, you work out what is right for both parties, and that is exactly the view we had going in.”
Two People Vital for Success
Yeats believes there are two persons who are absolutely critical for successful outsourcing partnerships. The first is the person who is managing the site, who must be flexible, good with users, and good with management. And the second is the person managing the account, who sorts out everything from the contract to new staffing issues, who can handle client requests for help, changes, additions, or anything else. Says Yeats, “They have been very good at that and made things work smoothly. They get back very quickly, whether it concerns hardware, software, consultant service, or a technical question.”
Close and regular communications are also critical in the relationship. In addition to regular weekly and monthly performance reviews, senior management representatives from Compaq visit ING Barings to check up on the relationship and discuss strategic issues. “We don’t ask for that, and they don’t have to do it, but we are happy with their efforts to continue the relationship,” Yeats says.
An Eye on the Future
The relationship is likely to continue to evolve over the next three years. ING Barings may go to a single consolidated help desk serving the current offices plus Bangkok, Jakarta, and India. Compaq has presented a proposal concerning a leasing arrangement for equipment and service that would free ING Barings from the responsibility of buying, maintaining, and replacing equipment.
Compaq and ING Barings have built consistently and continually on the relationship that has its foundation in help desk operations. The reasons for their mutual success lies in the people managing the relationship, the spirit of partnership, an attitude of keeping the clients happy that is demonstrated in responsiveness and flexibility. Yeats summarizes it this way, “We are working with people who have stayed with us and haven’t changed much, so they know our business and understand what’s important and what isn’t. They will do things that aren’t specifically in the scope of the agreement. I can go to one person at Compaq who will do whatever it takes. I don’t have to know how Compaq manages it, and they throw out the internal politics.”