American Ref-Fuel Outsources Its IT to Multiple Suppliers to Generate Business Benefits | Article

trash canHere’s an existential question for you: what happens to the trash after the garage person picks it up at your curb?

American Ref-Fuel provides disposal services for some of it. The energy company accepts it into one of its processing plants, where it turns refuse into fuel (hence its name) by burning the trash and turning it into electricity.

The company keeps costs from burning through its balance sheet by outsourcing a wide variety of functions, including – IT. The energy company has just 10 people in its information services department to manage a network of 400 PCs and 30 servers in 10 physical locations, according to Jeff Winter, Director of Information Services.

In addition, the company does not have a huge concentration of people in any one location. The company has six refuse plants and four satellite locations; each plant has between 40-60 people. “Each plant acts like a small business,” says Winter.

Another ten to twelve people work at the company’s weighing stations where the garbage companies pay the power generator to dispose of their trash. “We need computers to weigh the garbage trucks and generate a ticket. Those tickets are our company’s cash register. They are the lifeblood of our company,” he explains.

Winter says staffers at both types of locations “are not IT-savvy.” They know how to turn on the computer and work with the documents and that’s about it. So the energy company decided to outsource its asset management to Everdream.

“It is difficult for any company to efficiently track hardware and software assets,” says Dave Dalton, Vice President of Corporate Marketing for Everdream. He says it’s easy to count the computers when they’re all on one campus. But when a company has multiple locations, the level of difficulty jumps geometrically. That’s when an outsourcer steps in and solves the problem.

Winter estimates he would have to have two full-time employees to handle just the hardware and software inventory for the company’s dispersed workforce.

Why the Buyer Likes Unbundled Services

Winter says the energy company needed a way to automate its hardware and software inventory. It also wanted to have remote control to its desktops so it could fix any glitches over the Internet; Winter’s staff had remote control of their servers and found that capability valuable. “Once we outsourced, we didn’t have to send someone to fix a printer driver,” the IT executive explains. Adds Dalton, “It’s much cheaper than sending someone on a plane to resolve what may turn out to be a minor problem.”

Everdream also provides package installs for American Ref-Fuel. If the desktops need a technology refresh, the supplier can do it immediately, reports Winter. “We never got sophisticated enough to be able to set up those software packages ourselves,” he reports.

He now lets Everdream keep track of his system’s Microsoft patches. “Microsoft sends us zillions month after month,” he says. Now he knows exactly which machines have which upgrades because the supplier maintains a roster.

Dalton says securing the desktop and data is a part of the offering for businesses like banks and brokerages. But in the energy and utility industry, “IT is not their core competency, so they are good candidates for IT outsourcing.”

Winter met Everdream executives at a Gartner IT conference. At the time the supplier was offering a fully-loaded infrastructure package for $25 per PC per month, “which was outside our budget,” says Winter. But when Everdream decided to unbundle its services in 2003, American Ref-Fuel was interested.

“Everdream was flexible and allowed us to pick and choose the services that were important to us and that fit within our budget,” Winter says. Its package of services was “far more cost effective” than buying each service individually, according to Winter.

Outsourcing the Data Center for Back Up Protection

American Ref-Fuel outsources its data center to VeriCenter in a three-year contract. Before outsourcing, it ran its ERP system on a Unix machine in the main office. “But we didn’t have the right air conditioning,” he says. One day there was a huge thunderstorm in Houston, which knocked out the power at the company’s headquarters. The servers had 20 minutes of back-up power before all the company data was at risk. “We had to rush back to the office and shut down everything so we didn’t corrupt our data,” he recalls.

When the company moved from Texas to New Jersey, it decided to outsource its IT infrastructure. In addition to responding to outages and handling back-ups, the company wanted 24/7 monitoring and a call center ready to help day and night, according to Rahul Bakshi, West Region District Manager for VeriCenter.

Outsourcing solved that problem because VeriCenter has redundant infrastructure that allows for uninterrupted power, including redundant UPS and the ability to run on diesel generated power for an extended period. In addition to the power redundancy, additional layers of protection, including halon-based fire suppression, also support Ref-Fuel’s systems.

Moreover, outsourcing allows American Ref-fuel to afford more Internet bandwidth with greater redundancy. Before outsourcing, the company paid $1,000 month for just one megabyte of bandwidth. VeriCenter provides connectivity to multiple Tier 1 carriers with significant bandwidth capabilities, “something we could never afford,” says Winter.

The Value of Multisourcing

American Ref-Fuel outsources its hardware to AMC Corporation and its email filtering to MailWise. Winter says his suppliers have adopted a “highly collaborative team approach.” Bakshi says VeriCenter provides periodic access to the infrastructure to the other suppliers. “That’s our job because we are the remote eyes and ears of the company,” he adds. “We understand we have to work together.”

With outsourcing, Winter only has to hire a small cadre of highly-skilled people who are experts in a particular area, like managing his internal network or understanding the company’s financial ERP module. “We pay these people well so we have little turn over,” he reports.

“I’m outsourcing-mad,” says Winter. “We’ve found it more cost effective to outsource. Salaries, benefits, training, not to mention the necessary real estate. I don’t have to worry about any of it.” Then there’s the cost savings. American Ref-Fuel’s IT expense is about $3,300 per employee each year. Gartner says the industry standard is between $5,000-$6,000 per employee per year.

“Jeff is smart,” says Bakshi. “If the process doesn’t convert waste into energy, he wants to outsource it.”.

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