Sidebar: Outsourcing Market Now Favors Multisourcing, CIO Says

Nissan North America CIO Robert Greenberg spoke with Computerworld last week about the new IT management strategy he's implementing. Excerpts from that interview follow:

What's the direction that you've set for Nissan's IT operations? Let me give you a little bit of history. About six years ago, Nissan outsourced IT within North America to IBM. I came on board, approaching a year and a half ago, and looked at where we stood with that agreement and analyzed it. The world has changed pretty substantially since the original outsourcing was done, both in terms of the competitiveness of the outsourcing marketplace and the increased use of offshore vendors.

Looking at multivendor sourcing really seemed to make sense for us. So the way we went about doing that was to take what was a sole-source agreement for both infrastructure and application maintenance and enhancement services and break it apart and put it to bid. We were happy with the services [we were getting] from IBM, but the world had changed.

Did you have any reservations about taking a multisourcing approach? We did. One of the things that also took place with the original outsourcing to IBM was we probably outsourced too much. I think this is something that goes back and forth within the IT world when you're outsourcing: How much? We had outsourced a lot of the business analysis activity, the program management activity, and the application and infrastructure architecture activities. We decided to bring those back internal, so we're going though a fairly large hiring effort at the moment.

One of the risks that we looked at was in breaking up the services that we buy. [Another was] should we have been trying to have two competing vendors within, let's say, the application maintenance and enhancement space. We decided that when you actually looked at the applications portfolio and at the emerging capability of our internal organization, that was a risky approach versus the amount of incremental savings that we might obtain. So we decided to go just with the infrastructure contract and an applications contract.

What does bringing some of your IT functions back in-house involve? There is massive hiring, and there is significant training, and that training has to take place also in the context of moving these applications offshore. So there are fairly significant activities associated with knowledge transfer from the existing IBM staff to Nissan personnel as well as Satyam personnel.

What do you gain from this, IT-wise? In terms of the deal constructs, there are very significant savings. In terms of what we gain from a business-linkage standpoint -- how the IT organization creates value for the business -- it's much easier because the linkages exist within the [company], as opposed to within a third party.

Do you feel that you're improving your business alignment, then? Absolutely. It's a matter of building the knowledge internally [that] can be used to help drive the business activity, which is much harder when a business analyst function is sitting within a third party.

And you're actually saving money by moving those functions back in-house? In terms of the entirety of the deal, yes.

Copyright © 2006 IDG Communications, Inc.

  
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