Outsourcing Excellence Award: Best First Steps in IT
Glasgow City Council and Mitel Networks
Playwright George Bernard Shaw wrote, "Concentrate on one thing at a time and rule out all influences that don't have bearing on the task at hand." Great advice. But it wasn't being followed in Glasgow's public schools in 1998. The situation then in Scotland's biggest city was actually preventing teachers from teaching.
Ian McDonald, deputy director of education for Glasgow's City Council, says the city had spent "quite a lot of money" on Information and Communications Technology (ICT) for its schools. But the equipment was disparate (and much of it was even obsolete or dying), there was no network, and there were no maintenance contracts in place. "Consequently, a lot of teacher time was spent on trying to patch things, repair things, or deal with the software problems. A lot of their time was absorbed in non-teaching activities. It was a pretty bad situation, actually," McDonald recalls.
With education efforts about to go down the tubes and realizing that simply applying Band-aids was not enough to solve the problem, the city council set out to find an outsourcing provider to take over the ICT responsibilities. "We wanted teachers to be able to teach. And we wanted the service to work every day. We also wanted the equipment to be constantly updated so that people wouldn't be left with equipment that became obsolete," McDonald says.
Start Strong, End Strong
With those three objectives stated in its Request for Proposal (RFP), Glasgow's city council went through two years of culling through potential service providers and contract negotiations. Being a flagship project, there was rigorous competition among the 13 bidders. Wisely, the city council didn't rely on its own knowledge to craft the best solution for the challenges the schools faced. Instead of specifying an exhaustive laundry list of exact requirements, the RFP simply stated what the council wanted teachers and students to be able to do in the classrooms. It was up to each bidder to design a solution.
Mitel Networks offered the best quality solution and, interestingly, also offered the lowest price for services. The 12-year contract, signed in July 2000, covers all 273 primary and secondary schools in Glasgow. Mitel is responsible for building and maintaining a network linking every computer and every classroom and providing 13,000 new PCs and software, with a refresh after five years. Other strategic partners who work with Mitel in delivering the service include Hewlett Packard and Plato Learning. The contract guarantees Glasgow schools will run software that is no older than one generation off a product's newest version.
Archie Walker, Glasgow city council's ICT manager, says their schools are now "on the leading edge - even ahead of the game. And we now have direct inroads to other consultancies, such as HP, Cisco and Intel, because of Mitel's relationship with them." The contractual provisions include a mechanism for extending services for redevelopment. Already Mitel has demonstrated the benefits of using handheld devices as accompaniments to PCs in the classroom, and Glasgow's schools now enjoy some pilot use of this emerging technology. John Curley, senior education officer, who has responsibility for ICT, says the outsourcer is also exposing them to innovations in voice over IP and other developments beyond the simple telephony system currently in place.
Their highly satisfactory alliance hinges on more than innovation. Christie McLean, senior finance officer for Glasgow's ICT projects, says it's much more than a simple supplier/customer relationship, It is built on a level of trust and "genuine partnership" that the council sensed in the beginning. Ian McDonald says both organizations brought high-quality project teams to the negotiating table. "We had real synergy," he remembers. "We each saw that the other party had the same enthusiasm and genuine commitment to making this work. And it was important to know that the same people we were negotiating with would be the same people we would be working closely with as we went forward with the work."
No Quick Fixes
Glasgow's city council knew it had selected the right outsourcer when Mitel demonstrated its willingness to be flexible. From the get-go, there were challenges. After signing the contract in July 2000, Mitel had only a few weeks before the school term in August to roll out the first 3,000 PCs. Almost immediately they encountered some bugs in the LAN and WAN. "It's the biggest Windows 2000 network running in the UK," Walker says, "and it even took Microsoft by surprise." So there were teething problems that required an innovative solution.
Because there was a major citywide school refurbishment program underway at the same time as the ICT outsourcing implementation, there were further challenges. At each school, Mitel rolls out a partial IT provision and then finishes the networking after the refurbishment is completed. "Mitel has had to be very flexible," says John Curley. "Sometimes a school is not ready when Mitel is ready to roll out the network. By the same token, some schools are ready eight weeks early; so Mitel has to do the network, programming, develop the software and train the staff in time for the early rollout."
Even the software packages require flexibility from the outsourcer. Curley says each school has different software packages it wants to use, and those are always changing. With each change, Mitel first has to test the software on the network and train the staff. Mitel, he adds, is not only responsive to this challenge but also helps the schools identify appropriate software and is working on innovative solutions for these issues.
The End is a Circling Back
Glasgow's city council took another giant step at the outset of this relationship that captured the ultimate value that could be achieved from the outsourcing arrangement. They put in place a risk-reward scheme that ensures the schools' objectives of high-quality teaching will occur.
Mitel is rewarded for improving the learning and the teaching processes. Year on year, if the network and service level performance works well, McDonald explains, Mitel is paid 90% of its potential annual payment. If, in each year, the outsourcer meets the pre-determined staff development targets for Glasgow teachers and other staff, it receives another five percent.
The final five percent of the available payment is awarded for "learning gain" - that is, for measurable student learning improvements that occur because of Mitel's solutions. Because of the slowdowns from the school refurbishment project, measurements for learning and staff development gains won't be implemented until the entire system is installed and fully operational, around June 2002. "These two incentives are very important to us in terms of our professional obligations as educators," states McDonald.
According to Curley, "with most vendors, you get just what you pay for." But all the Glasgow city council members agree they're getting more from Mitel. "This is not a vendor relationship," states Walker. "I negotiate the contracts for the council, and these are described in great detail. If you leave something out well, you've had it because it's not in the contract. If you don't get it right in the contract, then it's your fault. And fault is what comes up in normal contracts."
"But we've never had a culture of fault with Mitel," he continues. "And there is plenty left out of the contract on both sides. This is a genuine partnership, and both of us are flexible and come to the table if we have difficulties."
In the end, it comes down to more than synergy and more than taking great first steps in constructing the relationship. "There is a great deal of trust between us," says Walker.
That's why it works so well.
Lessons from the Outsourcing Journal
- A best practice for obtaining an outsourcer's best possible solution is not to specify how to leverage the supplier's expertise and resources but, rather, to state desired results in the RFP and let the bidders come up with proposals of how to accomplish those goals
- A financial penalty for an outsourcer not performing at specified service levels is only one component of effectively guaranteeing high-quality service. It's best to include financial rewards that incentivize the outsourcer to leverage its expertise and resources to optimize the value of the solution.
- Because technology is rapidly changing, it's best to employ a contractual mechanism that includes ongoing development of services using new innovative IT solutions.