point
Menu
Magazines
Browse by year:
April - 2002 - issue > Cover Feature
Outsourcing Case Study
Tuesday, November 18, 2008

Faced with increasing demand from its end-users for IT resources and simultaneously pressured to reduce the total cost of ownership, TRW has embarked on an ambitious plan to increase the efficiency of its IT operations. The company is seeking to reduce the overall cost of managing its worldwide data center infrastructure and resources, and to consolidate 76 data centers across the globe into just three centers.

The automotive division of TRW has consolidated its data center operations into two major sites — one each servicing North America and Europe. Satyam was in the running to manage the data center operations at both these sites.

The Selection
TRW decided to select an outsourcer for the European operations. In the running were major players IBM, EDS and CSC, and Satyam. CSC and Satyam were short-listed to present their technical bids, and asked to provide details on processes related to managing the data center and how they would improve overall quality and service levels; HR processes; and plans to move all IT equipment to their respective facilities.

TRW awarded the contract to CSC, and in the aftermath of the loss, Satyam conducted an internal review, with help from TRW managers who informally identified some of Satyam’s comparative weaknesses. The company determined that its failure to win the European bid resulted from lack of experience and presence in the European IT space and the difficulty of overcoming its “new kid on the block” label with respect to infrastructure-related services.

Second Selection
When TRW Automotive North America was ready to invite bids from prospective outsourcers, Satyam had been busy overcoming some of its known weaknesses in this arena, and had won a contract to host and manage infrastructure for a major insurance company out of a facility in New Jersey.

This time, Satyam prevailed and was awarded the North American contract in August 2001. The engagement is worth $48 million over 5 years.

Services Provided
Satyam hosts and manages the infrastructure required to service the main production applications for TRW Automotive’s manufacturing plants throughout North America. Users around the world access global applications like PeopleSoft payroll & Expedio document management.

The data center supports SAP, PeopleSoft and other proprietary applications in use at TRW’s automotive divisions. The environment is primarily Unix Client Server-based, using Oracle, with front-end Web-based applications and supporting infrastructure. The operation includes a help desk that supports 65,000 TRW users in North America and Europe, spread across eight time zones. This translates into keeping applications up and running 24/7 with little or no “scheduled” down times. The infrastructure is designed to be highly fault tolerant, requiring significant investments in high-availability solutions.

Benefits to TRW
Financially, the outsourcing engagement protects TRW from any escalation in cost over the contract term. Basically, Satyam handed TRW an up-front, five-year invoice, removing a large planning challenge for the CFO. In addition, Satyam committed to defined 5 percent cost savings to be delivered to TRW starting in the second year of the contract. The actual cost savings that Satyam will deliver to TRW in terms of operational costs — leaving out fixed capital, lease and license costs — will be in the region of 25-30 percent per year.

Operationally, TRW users gain from committed service levels — something unheard of with in-house support units providing services on a “best-effort” basis. Service levels are monitored and managed using Satyam’s “Vision Compass” tool, which allows geographically disparate users to collaborate on performance statistics and lets users view performance online on the Web. Satyam hired Gartner Group to conduct a measurement exercise. Now underway, this exercise will measure the performance of the enterprise data center, compared to a peer group, and identify areas for improvement.

Satyam is applying its processes for managing operations from offshore locations to add offshore capabilities. As a beginning, the help desk operations will be handled by resources located in both North America and India to provide true 24/7 support.

Beyond these benefits, TRW employees who have transitioned over to Satyam are now part of a high-growth IT services company. TRW users, meanwhile, have the comfort of dealing with the same set of people for their IT support needs.

With a relationship that is based on a partnership rather than a “customer-vendor” model, TRW can exercise control over its operations without having to invest significant management overhead in a non-core activity.

“This strategic supplier relationship will be a great step in TRW’s ongoing battle to reduce costs company-wide,” says David Cote, TRW president and CEO.

Twitter
Share on LinkedIn
facebook