Westpac's outsourcing architects show true colours

The big bang outsourcing contracts made famous by the big banks over the past decade may have been a one-off occurrence, according to the architect of Westpac's famed multi-billion deal with IBM.

Managing vice president and general manager of Gartner's executive programs Asia Pacific practice Mary Ann Maxwell was Westpac's CIO when the 10-year outsourcing deal was signed back in 2000.

Maxwell led the development of the enterprise-wide IT solution and managed strategic outsourcing partnerships with IBM GSA and Telstra.

However, recent media reports have speculated Westpac may not re-enter into another big bang contract when the first comes to a close, and instead opt for a more selective model.

"I'm not surprised by the change," Maxwell told Computerworld. "When companies were thinking about outsourcing it was an enormous business decision for them."

Since the bank had been responsible for ICT "since the beginning", Maxwell said the idea of outsourcing it was "pretty daunting".

As to why the concept of a large monolithic outsourcing contract was chosen over a range of outsourcers that could provide a range of services, Maxwell said the "one stop to go to" philosophy eventuated because most organizations didn't have the skills to deal with outsourcing at the time.

"So a lot saw the opportunity to work with a single vendor, or two vendors, as the most advantageous way to go into outsourcing," she said.

"It's not surprising, now contracts are coming to an end, the banks are saying we are more capable of managing outsourcing [and] looking at the opportunity of multi-sourcing relationships that are more sophisticated."

Maxwell believes big bang contracts are "probably" past their use-by date but gave the sombre prediction that "very few" organizations that outsource actually insource again.

"You have to rebuild skills and rehire people, and some may no longer be there," she said, adding there is also the concept of concentrating on the areas of the business that give competitive advantage.

"When you looked at it ten years ago it was seen as a real opportunity to remove capital assets from the balance sheet [so] the cost of assets can be spread out through the cost of the outsourcing contract."

Join CIO, the CIO Executive Council & IDC on 6 October at Australia’s premier Melbourne event for senior IT executives – the CIO Summit 2010. Find out more or register now.

• Bookmark this page
• Share this article
  • facebook
  • slashdot
  • digg
  • Reddit
  • stumbleupon
  • linkedin
  • twitter
• Got more on this story? Email CIO
• Follow CIO on twitter

Comments