How Outsourcing Helped John Wiley’s IT Department Keep the Business Going During an Acquisition | Article
Three years ago book publisher John Wiley & Sons, Inc., was about to purchase Blackwell Publishers for approximately $1.2 billion. Warren Fristensky, senior vice president and chief information officer, says figuratively the acquisition was “like a python swallowing a pig,” given Wiley was twice the size of Blackwell.
The acquisition created a challenging situation for Wiley’s IT department. “We had to keep our other businesses going before, during, and after the acquisition,” explains the CIO.
That meant the department had to accelerate the completion of certain key projects. But the publisher didn’t want to grow its internal IT staff. “We faced some tough choices. We realized we couldn’t do this alone,” says Fristensky.
Outsourcing was the best choice. The New Jersey publisher didn’t view outsourcing as “handing off our projects to a supplier. This wasn’t about maintenance. It was about strategic work. We needed a partner,” he says.
Who to choose? The publisher used LANSA, a niche AS400 integrated development tool for IBM hardware. Wiley didn’t want to search for LANSA engineers. Wiley executives talked to LANSA’s president. He suggested MindTree because LANSA itself is using that provider as its outsourcer for its new platform. “We are the largest LANSA experts outside of LANSA,” says Scott Staples, MindTree president and Co-CEO, IT Services.
That made selecting MindTree easy. “We didn’t have time for practice rounds,” Fristensky continues. “We needed our service provider to handle priority projects right out of the box.”
Even though the supplier does 95 percent of the work in Bangalore, the Wiley CIO says, “This wasn’t about cost.”
The first project: global sales automation
Wiley started small in size but not in importance. MindTree’s first assignment was a global sales automation system for Wiley’s higher education business. The company had regional sales tools. “We needed to ramp this up to a new level,” Fristensky says. “Now was the time to go global.”
If that wasn’t a big enough challenge, the buyer added another layer of difficulty: MindTree had to complete the development project before the acquisition date.
The supplier assigned an executive to the New Jersey headquarters and assembled a team of three people in Bangalore. Ninety days later it added a fourth person.
MindTree got close to the required completion date, although changes by Wiley caused minor slippage. Fristensky explains, “We selected MindTree because it was an expert in the specialty software we used. But we expanded the scope beyond that once we got comfortable.”
The second project: building on knowledge from the first
The second project was building a data warehouse and analytic systems for corporate business intelligence. Wiley uses Cognos Inc.’s business intelligence systems. MindTree also already had a practice in Cognos tools.
Fristensky says the supplier was able to build on its knowledge of Wiley’s inner workings after working on the first project. “They understood how our business operates and how our data works,” the CIO explains. He says Wiley’s departments imparted this corporate knowledge to the supplier; “this strengthened their ability to work with us,” he explains. He stops and adds, “We don’t have to tell them twice.”
Next came “a very complicated” system for the publisher’s online scientific journals. It sells licenses to these journals to universities and pharmaceutical companies. “The system has to reflect who can use the tools, where they can use them, and when,” says the CIO. The publisher also wanted to enhance the application and make it more user friendly.
Ashutosh Shukla, vice president and general manager and head of North American sales for MindTree, says college professors who like the information they receive online become “big reference points for the company.” That’s why it’s important for the company to track the professor community closely, he explains.
When that was done, Wiley asked MindTree to amalgamate its publishing and editorial systems into one system. Before outsourcing, it had disparate systems around the world. “We really needed to modernize this system,” says Fristensky. After the acquisition, “this became even more important,” he adds.
To date Wiley has given MindTree 10 different assignments which have “all been successful,” reports Fristensky. To date all have had the same high quality as his in-house work.
He says the parties write a statement of work for each project because “we need to know what we want at the end.” He says the parties write down what they think the project will need “and then manage to that.”
Offshoring works for Wiley because there’s always an onshore and offshore resource available. “We believe you need an on-site executive for daily interaction and hand-holding when necessary,” says Staples.
Currently MindTree has two executives in the United States, one in the UK, and one in Bangalore working with Wiley. The publisher also has its own offices in India. “We encourage people-to-people relationships,” Fristensky says.
The Indian manager speaks three Indian dialects so he can communicate with his Bangalore team. At the same time, MindTree makes sure its on-site people have deep domain knowledge so they can communicate with their buyers. “Our team leaders know the acronyms in the industry they work in,” says Shukla.
The partners use a co-development effort since the teams are virtual. A typical team might include three Wiley locations in the United States with MindTree teams in Australia and India. Everyone uses one copy of the system. “Ten years ago this wouldn’t work,” because the technology was just not available, according to Fristensky.
Fristensky says Wiley has always been a multicultural company with locations around the globe including Asia. Offshoring was an easy extension of that corporate philosophy. “We were used to dealing with Asians,” he says. “And we view IT itself as a virtual United Nations with colleagues of many nationalities collaborating towards the same goals.”
The important thing is these successes “allowed us to accelerate our pre-acquisition assignments so we could keep our other businesses going,” the CIO says. “Outsourcing allowed us to punch above our weight.”
Today with much of the Blackwell acquisition integration completed, we are a stronger company because we outsource,” says Fristensky.
He says the IT department at Wiley is now more flexible because it has an IT team that can scale up or down. And it did save money: 47 percent the first year.
Building a trusted partnership
“It’s important to treat your service provider as a partner. It requires management engagement on both sides. This is a trusted long-term relationship. We come to the dance as a single team,” says Fristensky.
The Wiley executive says service providers and buyers have to create a “triangle of trust” to create a trusted long-term relationship. The three points of the triangle are commitment, competency, and compassion. “This is how you go from ‘them’ to ‘us,'” he explains. Adds Staples, “Our buyers know outsourcing is a two-way street. To work, it has to be a joint effort.”
Fristensky says having a similar corporate culture is crucial in outsourcing success. “How both parties think about things really counts,” he says. In this case, both parties are collaborative. In addition, Staples says Wiley “has invested as much in this relationship as we have.” For example, MindTree suggested Wiley executives travel to India at least once a year to meet their team.
Staples says MindTree needs a CIO’s “complete blessing” to ensure a successful relationship. “If the buyer won’t agree to holding regular steering committee meetings with senior management from both parties, we don’t want them as a client.”
Communication is also important. “We have to engage people from top to bottom about your joint efforts,” says Fristensky.
When it comes to feedback, he says he has the right to critique MindTree. But that gives them the right to critique his operation. “We use our service provider as a mirror. You see a lot of yourself in that mirror,” he explains.
He says his organization has scope creep and sometimes his buyers are slow to make IT decisions. “We use MindTree to help us,” he adds. “We tell our buyers they have to decide because the clock is ticking.”
The CIO says Wiley insisted the master services agreement is “balanced and fair.” But he says he never intended to use it “as a club.” Instead, both parties worked to avoid a contract “so onerous no one could live with it.”
Staples says Wiley “has the right attitude towards us. They communicate this partnership is for real.”
Currently MindTree has 8,000 employees. It does business in 33 U.S. states, according to Staples.
Visits to India are a cornerstone of MindTree’s offshoring philosophy. The supplier calls the initial visit its “offshore best practices workshop. MindTree asks its buyers to describe to their Indian team “what’s happening in their business,” says Staples. “It’s important they share their challenges because it helps their offshore team understand why they are working on this project.”
Lessons from the Outsourcing Journal:
- Mergers create unusual demands. The merger forced Wiley to complete projects so its IT department could help the company function during the merger. Outsourcing enabled it to do this.
- While offshoring is often about cost savings, that’s not the only reason to send work to another country. In this case it was to meet strategic goals to prepare for a merger.
- The supplier invites buyer executives to share their business challenges with their new Indian team. This workshop in India helps the offshore team understand the project’s pressure points.
- Having a similar corporate culture is crucial to outsourcing success.