Most Visionary Outsourcing Relationship
2000 Editor's Choice Award Compaq/ Computer Corporation and Jabil Circuit
From the Editor: This award illustrates the ability to expand SAP outsourcing into a whole new venue, e-commerce. E-commerce, of course, is the hottest area for outsourcing expansion. Jabil originally outsourced its SAP application to Compaq to manage its global growth throughout North America, Asia and Europe. This outsourcing proved to be the perfect springboard to attack e-commerce.
Jabil, a global contract manufacturer of circuit boards, has been growing by leaps and bounds. With approximately 15 locations throughout North America, Asia, Europe and Mexico, growth and efforts to keep up with an evolving environment is the company's greatest challenge. Lia Richey, global operations support manager at Jabil, says the company has rolled out a site per quarter on an SAP application initially, and are now able to do this bimonthly."We had some really strong in-house technical resources, so the choice to outsource was a tough decision," she says. "But we opted to outsource because we weren't going to be able to keep up with our growth, with all of the other corporate IT projects that we had going on."
Going Above and Beyond
Jabil began outsourcing the support and the environment of the SAP application to Compaq in February 1998. Compaq provides 24/7 support on the hardware and the applications. But Compaq's role in the arrangement has been one of providing added value.
Richey explains how the supplier has helped Jabil define its processes. "One of the things that we have actually learned from them is how to get better at incorporating standard processes. Compaq is showing us how documenting checkpoints, controls, methods and procedures that are critical to the growth of a business. And they have helped us to identify some of those areas where Jabil had some challenges." This is a core competency of Compaq, and it maintains a competency center for escalating issues to a really high level. Richey adds, "Compaq has great resources that we can rely on to get us consulting on things that we are trying to do. They are totally an extension of our company, and they make sure that Jabil is not exposed in anyway."
Jabil is now looking to Compaq to help the company grow in e-commerce and is considering the possibility of outsourcing the e-commerce infrastructure to Compaq in the next three months. Compaq is working on a disaster recovery program that will be operational to Jabil in November. "Compaq has been a great selection because it is always right on board with where we need to be," Richey says. "They have experience that we haven't been through yet, so they bring to the table a lot of issues and expertise that goes above and beyond."
Because the SAP application is so new, Jabil is still making constant changes to it in order to meet its business needs. Compaq houses Jabil's test, stage and production box. The production box is what the business runs on and where all of the company's business information resides. The test box is a mirror of what runs in production. It enables Jabil to roll out new applications or upgrade its software package, running them first on the test box, to make sure they will not cause any problems for production.
Last year Jabil outsourced its wide area network (WAN) to Compaq. But it did not work well. So Jabil sat down with Compaq and tried to figure out why it was not working as well as everything else. The parties came to the conclusion that the problem was a result of Compaq acting as the middleman to Jabil's long distance carrier.
"We realized that it wasn't a great business decision, and it wasn't going to help Jabil if we continued to do it that way," Richey admits. "So we sat down and worked out a plan to transition those services back to Jabil. And I think that the greatest part about the entire situation is that we recognized the problem together. I don't want to say that Compaq didn't feel any pain from that, but I can honestly tell you that Compaq's first priority was Jabil's needs."
Compaq's efforts to work through a challenging situation on behalf of its customer illustrate the team effort that Compaq strives to maintain. Although the supplier's first goal is to provide expertise in competencies that are not core to Jabil, and provide the best cost solution, it seeks to provide more. Compaq makes every effort to grow with Jabil. The result of its efforts is a strong alliance with a bright and successful future. "The team that we have is really great," Richey says. "I hope that we always have them. We see Compaq as part of our future and just extended our contract with them for two more years. It is great to have them as a business partner."
Lessons from the Outsourcing Primer
- Outsourcing SAP can help manage global growth.
- Outsourcing can help you define and standardize your business processes as well as point any out corporate challenges.
- Outsourcing can help you expand into new areas like e-commerce.