Outsourcing Excellence Award – Best Business Challenge – Citrix and HP Global Services
Citrix Systems Inc.’s headquarters is in Fort Lauderdale, Florida, which is prime hurricane territory. The company knows the importance of business continuity and availability plans when 80-mile-an-hour winds come howling through. So it outsourced its disaster recovery in 2002, knowing that its business would be safe whenever a storm picked up strength in the Florida area.
Boy, were they glad they did.
Last year was a landmark year for devastating hurricanes. Fort Lauderdale was hit with three: Katrina, Rita, and Wilma. “We took a direct hit from Wilma,” says Michael Martin, Senior Manager, Customer Care for Citrix. The hurricane shut down Citrix’s main facility, which consists of seven buildings. “It shut us down for 15 days in October,” he reports.
Fifteen days is an eternity for customers waiting for their products. Citrix provides software and hardware solutions that help its customers access their applications on any device, anywhere, any time. The Florida company also outsourced its fulfillment process, which HP Services handles by both physical software kit fulfillment and electronic Web downloads.
Citrix’s worldwide contract is with HP’s Software Publishing Services, which is part of HP’s Business Process Outsourcing portfolio. HP stocks and ships Citrix training products worldwide; this includes 670 SKUs.
A Business-Continuity-and-Availability Plan in Action
Citrix discovered that HP’s disaster-recovery system “performed flawlessly,” reports Martin.
At the flip of a switch, Citrix shifted its ERP, ordering system, and fulfillment to HP; the supplier took over the complete delivery of all its software and hardware products to Citrix customers. “It took five minutes to move our factory from one side of the country to the other,” he still marvels.
The forecasters predicted Wilma would touch down on a Monday morning. On Saturday afternoon Citrix sent 11 members of its order-entry team to HP’s disaster-recovery center in Nashua, New Hampshire. HP graciously provided Internet connections and phone service to its guests. “HP was a phenomenal host. The minute our people arrived, HP was ready for them to get to work,” reports Martin.
“We didn’t miss a single shipment,” he says with pride. “Their customers didn’t notice a blip,” adds Mike McNally, Business Development Manager for HP.
Shipping wasn’t the only challenge, points out McNally. The month was ending and Citrix needed to produce its month-end invoicing. “They wanted to recognize revenue, so we assisted Citrix with its month-end invoicing,” says the HP executive.
McNally says HP has back-up copies of all Citrix’s software content and digital assets. The supplier was able to process sales which allowed Citrix employees to invoice customers on the Citrix ERP system onsite.
The Citrix employees originally thought they would only spend three days in New England. They soon heard there was significant damage to the area. The power outages made returning to Florida not an option. The Citrix staff ended up spending eight days in New Hampshire.
Before outsourcing business continuity to HP, Martin says Citrix had no redundancy in its fulfillment process. He says management realized it had to craft a business-continuity plan when a plant shut down in 2001, rendering the company virtually out of business. “If we hadn’t outsourced, we would have been out of business for two weeks. Nothing would have gone out into our channel. Our customers would have received no support. That would have had serious financial consequences for us,” says the Citrix manager.
McNally says Citrix tests its business-continuity-and-availability plan with HP every year. The disaster plan has carefully detailed documents and specific procedures. “We always simulate a hurricane-based interruption in service,” he says.
Last year was not the first time Citrix had the opportunity to test the efficacy of its business-continuity-and-availability plan. McNally says there were two Category 4 hurricanes in Florida in 2004; Citrix sent employees to New Hampshire then but they only stayed 24 hours. The software developer also sent a team to New England before Katrina and Rita. Each time they were home in a day.
“But it was Wilma that really tested the process,” says McNally. It was the first time a customer actually moved in to run their business on HP’s systems. “We were pleased things went so smoothly for such an extended period of time,” he adds.
If the Citrix employees couldn’t return home in two weeks, HP was prepared to move hardware and provide additional space in New Hampshire to accommodate their needs.
Outsourcing to HP has provided other business benefits for Citrix. The company had outsourced the fulfillment of its training materials to another, smaller firm. Citrix buyers typically hold training session in their corporate offices or hotels. “Quality was a big issue,” remembers Martin.
Citrix decided to replace its supply chain provider. It spent 18 months interviewing 20 firms from across the globe and evaluating them, using a 32-question report card. Martin says some suppliers lost interest “because we weren’t going to give them the key right away.”
“HP won us over because of its proven quality system,” Martin remembers. “Almost everybody can provide an ISO 9000 organization. But when you see how they operate, you can tell they take the necessary extra steps.” McNally also added, “We have a track record of on-time delivery.”
Martin says the Citrix leadership was also “impressed” with HP’s backbone and infrastructure. “We saw the possibility of future services we could use. A lot of people in the software-publishing industry can deal with a packaged product but have to form a secondary partnership because they can’t do one thing or another. We knew that wasn’t the case with HP; they had the full competency,” he says.
At the last minute, Citrix decided to include fulfillment of its Gateway product line into the outsourcing contract. “HP had no problem taking over this process. This was a big deal because it’s one thing to store a small package or book. But these are big computers. HP went out of its way to accommodate us,” Martin says.
Citrix initially signed an outsourcing contract for three years in 2002 and recently renewed that contract for another five years.
The first task was to produce training materials. Martin says this was a challenging first assignment because there were 168 SKUs. HP suggested Citrix combine kits and reduced the SKUs to 32. “That’s been a great help,” says Martin.
In addition, Citrix was in the midst of a challenging conversion from an older ERP system to SAP. It sought help from HP to install an interface between the two systems. “We were up and running in three months,” reports the Citrix manager.
Martin says during the transition both teams met weekly to work through issues. “The goal was to create a completely seamless transition,” he explains. This was a challenge since “we had to work out a new process that neither of us had seen somewhere else.” The trick: “We both had to be adaptable and flexible to get the job done.”
“Transition is turmoil in most outsourcing engagements,” says McNally. “We had a successful transition because both companies made the right resources available.”
Martin says this outsourcing relationship “is transparent to us.” He says he realizes Citrix has unique needs. Fortunately, “HP has been willing to accommodate us.” He says whenever Citrix pushed in new directions, “HP never said no. They were always willing to work with us.”
If there’s a dispute, the two teams go through a root-cause analysis to determine what happened. He says he has the office and cell phone numbers of every HP employee who plays an important role in the relationship. “I can call on Saturday if I have to check on something,” says Martin.
“We view HP as a critical business partner. When you’re in a partnership, you are open and honest. I see a lot of cooperation on both sides,” he adds. McNally says his employees feel they are “extended Citrix employees.”
McNally says two things create a successful outsourcing relationship: quarterly management reviews and clear metrics. He says both teams look at delivery performance, quality, customer satisfaction, and cost improvements every 90 days. “Everybody can see how they are doing. There are no surprises.”
HP says the teams use the quarterly meetings to choose two or three initiatives to work on during the upcoming quarter. “Then we both stay focused on our joint list.”
McNally says metrics discussed in the quarterly meetings are an on-going way to see how the contract is working throughout the duration of the agreement. “You don’t want to learn you are not meeting their expectations at contract renewal time,” he explains.
Martin says he has not had a single quality issue since outsourcing to HP. Prior to working with HP, Martin says he was afraid to walk by the offices of the product developers because he knew he would be inundated with quality problems. No more. He says Citrix now “operates at a 99.9 percent accuracy level.”
Outsourcing to HP has allowed Citrix’s IT department to make important improvements. “Now they can concentrate on other things more valuable to the business than product downloads,” he says.
Customer satisfaction is up. “Our customers give HP high rankings. They are happy,” Martin reports.
Outsourcing to HP has allowed Citrix to introduce new products at the same time in all regions. There were times that Asian markets sometimes had to wait two weeks for a new product. In addition, HP now provides global support to Citrix from the US, Ireland, and Singapore that enables consistent and timely product delivery.
You can’t argue with the savings. Martin says Citrix is saving 30 percent on the IT side and 25-30 percent on the product side. Citrix is able to grow, knowing its cost of goods and services from HP will stay the same or decrease. This improves Citrix’s financial results.
Martin labels this relationship as “blissful.” That’s not the usual adjective used in front of the word outsourcing.
HP’s Top 10 Benefits of Outsourcing: Beyond Cost Savings
While cost savings are an important benefit of outsourcing engagements, there are many other value-added benefits that buyers need to consider when making the decision to outsource and choosing a provider. Companies should not make their decision on an outsourcing partner based solely on being the “low-cost provider.” This reduces the relationship to a more tactical level and loses the strategic value an outsourcing partnership can provide to the overall business.
Here are the top 10 benefits of outsourcing, aside from cost savings:
- Increases productivity
- Increases mobility
- Frees up resources to focus on core competencies and innovation
- Provides business continuity and security
- Reduces complexity and improves performance
- Consolidates to create a single view into technology environment
- Provides governance and compliance
- Improves process
- Reduces points of accountability
- Provides accountability to service level agreements