E.ON powers up IT outsourcing to aid £1.8bn cost cutting

E.ON, which is in the midst of a major efficiency programme, has said IT outsourcing is playing a major part in the changes.

The electricity and gas utility said today that it had achieved over €1.1 billion cost savings (£940,000) during the last year, as it moved a number of IT functions from being run in-house to two outsourcers - a transition that affected around 1,400 jobs.

The savings were achieved under its Perform To Win programme, which includes extending shared services and effecting standardisation, streamlining processes, and improving procurement, sales and marketing.

The news comes as the company announced its annual net income tumbled 30 percent to €5.9 billion. E.ON is now targeting €1.5 billion total savings by the end of next year, and a further €600 million by the end of 2013 – taking the total to €2.1 billion (£1.8 billion).

Under the plan, HP runs E.ON’s data centres and PCs – in an £890 million deal that will include the provision of ‘private cloud’ computing. HP already supplies hardware, support services and managed print services.

The utility’s IT networks are run by T-Systems, which has a deal worth up to £860 million dependent on its eventual duration. Both the HP and T-Systems deals will are expected to run for an initial term of at least five years.

At the time of signing the deals, E.ON said it needed “consistent, innovative and agile IT services”.

As part of the outsourcing deals, around 1,100 E.ON staff are moving to HP and approximately 300 to T-Systems. The 2,700 remaining in E.ON’s IT department will continue to decide IT strategy, and run applications, security and the main power station control systems.

While E.ON’s overall workforce size remained at around 85,000 employees, UK staffing levels declined eight percent to 14,830 staff, a reduction the energy firm said was “mainly attributable” to IT changes, efficiency measures in retail operations and the divestment of its energy services business.

Copyright © 2011 IDG Communications, Inc.

Shop Tech Products at Amazon