Multivendor outsourcing wins some fans, but others not sold

Computerworld - LOS ANGELES -- When IT executives talk about having a "multisourced" environment, they often mean that they're using two or three large outsourcing vendors to run their technology operations. But at Sunoco Inc., multisourcing has meant turning to 17 companies to deliver IT infrastructure services over the past several years.
Tim Murtha, who this week retired from his job as manager of systems at Sunoco after a 40-year career in its IT department, said at an outsourcing conference held here by Gartner Inc. that the petroleum and chemical company believes in using best-of-breed service providers.
Murtha said large outsourcing vendors often subcontract out specialized work, such as managing virtual private networks or IT security functions. By working directly with smaller vendors, Murtha felt that Philadelphia-based Sunoco was in a better position to get lower prices overall. "At the end of the day, we knew we were going to drive a lower unit cost," he said, although he wouldn't disclose any financial details.
At the Gartner conference, some attendees wondered whether the cost of managing numerous vendors would offset any possible contract gains. They said that they're trying to find the right formula for using different vendors without adding costs or undermining their existing outsourcing relationships.
George Jannino, director of technology contract management at Starwood Hotels & Resorts Worldwide Inc., said the hardest part of moving to a best-of-breed outsourcing approach is managing the process. "Are those guys going to play well together? That's kind of a big argument against it for us," he said.
White Plains, N.Y.-based Starwood, which owns hotel chains such as Westin and Sheraton Hotels & Resorts, is using two primary IT services vendors. The company previously had relied on IBM to manage its core IT infrastructure. But last fall, it signed a seven-year, $100 million technology and outsourcing contract with Hewlett-Packard Co. as part of a plan to replace its mainframes with Unix and Linux systems (see story).
IBM continues to provide some IT services at Starwood and will play a key role at many of its properties, handling tasks such as installation of kiosks, said Starwood CIO Bill Oates. He added that he isn't ruling out adding a third major vendor to the outsourcing mix, particularly in application development, which is mostly done in-house now.
And despite his reservations about best-of-breed outsourcing, Jannino said the contract with HP is based on a "tower" approach that gives Starwood the ability to terminate individual IT services if HP isn't meeting specified performance levels and shift them to