Long-term relationships reap rewards in any field, and outsourcing is no exception. In late March 2003 Fujitsu Consulting became the first “nonembedded systems” company to receive a Supplier of the Year award from aerospace giant Boeing. (“Nonembedded systems” are systems unrelated to production.) Boeing and Fujitsu Consulting have worked together for 13 years.
Boeing, based in Chicago, Illinois, instituted the Supplier of the Year awards in 2001 to reward top service providers for exceptional performance. “We wanted to present a single face to our supplier base,” says William Stowers, vice president of supplier management for Boeing Integrated Defense Systems. “We wanted all to recognize the mutual leverage each of us has in the relationship.”
Boeing contracts with over 11,000 providers in 66 countries in nine strategic sourcing categories; Fujitsu Consulting was selected from over 5,000 providers in the non-production category. There were 14 award winners from four countries; Fujitsu Consulting was the only winner in non-production and the only outsourcing service provider among the winners. “We are very indebted to suppliers like Fujitsu who go beyond the normal business relationship,” says Stowers.
What Makes a Supplier of the Year
Fujitsu Consulting, based in Edison, New Jersey, “has continually impressed Boeing with its high-caliber consulting and excellent products and services,” says Nancy Miller, Boeing’s procurement manager for operations and equipment. “Fujitsu has a proven track record of providing quality deliverables and meeting and exceeding all service level agreement performance measures. They’ve achieved 100 percent on-time delivery of all contracted projects and deliverables.”
“Fujitsu Consulting has demonstrated its ability to avoid delays by taking the time to understand our requirements and through effective project management,” says Maria McCullough, manager of Supplier Communications for the External Communications Division of Boeing Integrated Defense Systems. “Suppliers of the Year are chosen based on how well they achieved specific metrics. Fujitsu’s performance against the supplier management measures in 2002 won them the award.”
Fujitsu Software Becomes Boeing’s IT Standard
The products they gave Boeing didn’t hurt, either. Fujitsu Consulting’s integrated business and IT system, MacroscopeÆ, has become Boeing’s company-wide standard for application development and maintenance methodology. “We select IT standards on the basis of how well they fit into our IT architecture, technical performance against Boeing requirements, product stability, cost, and customer acceptance,” says McCullough. “MacroscopeÆ can handle IT projects as large as those in Boeing, which very few off-the-shelf products can do.”
Ultimately, what makes a Supplier of the Year is reliability–a record of delivering as promised and maintaining customer satisfaction. “The most important factor is the trust we’ve built through consistent success,” says Dave Chapman, the Fujitsu Consulting vice president responsible for managing relations with Boeing.
So What Exactly Did They Do?
While Fujitsu Consulting has worked with Boeing since 1989 (and on an expanded scale since 1995), the two projects that most influenced the Supplier of the Year award–one involving the migration of an old system, the other the development of a new system–date back fewer than five years. In 1999, Fujitsu Consulting assumed responsibility for the maintenance and decommissioning of Boeing’s Legacy Human Resources System, whose COBOL mainframe was being replaced by a PeopleSoft HR system. Fujitsu Consulting’s work on this project lasted until the old application was fully decommissioned in 2002.
2002 also marked the outsourcing of a second major application, the Revenue Management System (RMS), which manages Boeing’s aircraft pricing, invoicing, and forecasting. Fujitsu Consulting developed and implemented the application, managing delivery through a phased approach which ensured that critical pieces were delivered on time and within budget at a less than one percent defect rate. Fujitsu Consulting remains in charge of maintenance and enhancements for the RMS.
Boeing’s Work Done Nearshore in Canada
Accomplishing such big things for a big company like Boeing requires resources. Fujitsu Consulting–DMR Consulting until it adopted the name of its corporate parent in 2002–has some 70 offices worldwide and employs over 7,000 people. As part of Fujitsu Ltd., the third largest IT services firm in the world, Fujitsu Consulting can work on- or offshore, sending information anywhere in the world through its global network of delivery centers.
The Boeing account is handled from a nearshore center of operations, the Atlantic Delivery Centre in Canada, which has one base in Saint John, New Brunswick, and one in Halifax, Nova Scotia.
Fujitsu decided to move the work to Canada to reduce costs and improve delivery efficiency through improved productivity and lower salary and service delivery costs. In addition, the exchange rate between the U.S. and Canadian dollar benefits the Canadian service provider.
Whatever changes lie ahead for IT outsourcing, the value placed on timeliness, trust, and good relationships–the basic qualities required for a Supplier of the Year–will stay the same. The human element remains the most important through all the shifts in business and technology.
Lessons from the Outsourcing Journal:
- On-schedule delivery and effective communication are the little things that make a service provider stand out. Ultimately, the customer sets the standards of performance.
- Long-term outsourcing relationships allow the service provider to have a head start on new initiatives since it is able to build on the culture of the past.
- Moving the work nearshore to Canada allows Boeing to benefit from the difference in the exchange rate and lower Canadian salaries and delivery costs.