Outsourcing application maintenance reduces costs and improves application support service levels
CHOOSING AN APPLICATION OUTSOURCING PROVIDER
When Lundbeck launched its Fit for the Future corporate efficiency program in 2014, Corporate IT was one of the first to be put under the spotlight. The focus on increasing efficiency drove the need to reduce the costs of supporting multiple business applications, while improving flexibility, scalability and service levels.
While many corporate services were centralized to Poland, the decision was made to outsource the maintenance of major applications. Claus Thomsen, Vice President, CIO at Lundbeck, explains: “We could have built our own application team, but we decided it made better sense to outsource application maintenance. There are 22 different applications covering different technology platforms, all of which require frequent maintenance. We are a relatively small IT department and it would be difficult and expensive to maintain the necessary competencies in the different technologies. To get access to the right competencies, it was better for us to outsource.”
When a company outsources a major part of its IT services, normal procedure is to start a tender process. But Lundbeck did things a bit differently. Claus Thomsen had already established a cost baseline after conducting an analysis together with Deloitte.
Claus and his colleagues approached NNIT directly for a solution. Lundbeck already had an excellent working relationship with NNIT from previous projects. It was a decision made easier because of NNIT’s experience in pharmaceuticals, GxP expertise and the close proximity of the management team.
Tanja Danner, Transition Manager at NNIT, saw this as an excellent opportunity for NNIT to provide a cost-effective solution that would improve service levels to line of business. Following brief negotiations, an agreement was made for NNIT to provide support and maintenance for 22 of Lundbeck’s business applications.
The project moved fast, which was important to Claus Thomsen: “When we announced the outsourcing, employees at Lundbeck could see that it might affect their jobs. We didn’t want people to be uncertain about their situations for too long, and we didn’t want a long tender process. Also, if we could reduce implementation time, we would get the benefits of the outsourcing solution sooner.”
NNIT ran the process based on its proven Transition Framework for transitioning applications from customer to vendor. Encompassing transition planning, knowledge transfer, documentation and training, the process involved various activities for developing a global Application Maintenance Services (AMS) delivery organization.
NNIT assisted Claus Thomsen and his team in understanding their role and responsibilities in the transition. This was needed because Lundbeck was a first-time outsourcer of application maintenance on 2nd and 3rd-level ITIL-based functional and technical support. Tanja Danner explains that insourcing eight IT staff from Lundbeck was an important part of the agreement: “Lundbeck wanted to ensure redundant employees were given good opportunities to be part of a future solution. For us, it was a risk minimizer for the transition as these staff brought their knowledge of Lundbeck’s business to the NNIT team.”
The transition took place over 6 months. Claus Thomsen speaks very positively about NNIT’s contribution and flexible attitude. Despite other ongoing activities meaning Lundbeck couldn’t always focus on the transition, all deadlines were met.
The change management element was a case in point, he says: “The contract involved both parties providing a change manager as part of the transition team. But since we did not have a change manager available, NNIT stepped in.” The change manager became an integral part of the Lundbeck team, assisting Claus with communications to Lundbeck colleagues throughout the process. This is essential to a successful transition, says Tanja Danner, explaining: “With a transition of this type, the only thing you move is knowledge from one person to another. Communication is vital for changing work habits of those affected by new systems and processes.”
Claus Thomsen points out that the transition period was actually healthy for Lundbeck’s internal processes: “We had rather informal processes for some of our applications, and transitioning these applications proved to be the most challenging. NNIT, with their business process knowledge, helped us to get the IT process in place. It was also important to understand these processes from an ongoing cost perspective, because, with support outsourced, there is a very visible cost associated with requesting support. When the processes are sufficiently aligned, the costs of support will be minimized.”
The transition was completed in July 2014, and Lundbeck has been running with the outsourcing model ever since. The set-up is optimized to Lundbeck’s business needs allowing changes to be made to applications quickly and efficiently. This is vital to Lundbeck's line of business managers, to whom speed makes all the difference in Lundbeck’s competitive, dynamic market.
Claus Thomsen is satisfied with the results, but not just because it gives them the “competence flexbility" they were aiming for. One of the positive spin-offs has been the increased focus on KPIs: “Now we don’t need to spend time discussing resource allocations. We can have productive, qualified discussions with line of business about what support is required and exactly what it will cost. This helps us meet our internal KPIs and keep our application maintenance costs firmly under control."
The outsourcing agreement includes KPIs for NNIT. NNIT is performing well, almost always achieving green KPI ratings. But although NNIT is expected to perform at this high level, Claus takes a pragmatic view and believes his own organization has a responsibility to contribute to the relationship: “I don’t expect NNIT to know everything. It’s a partnership, and we both have to accept that not everyone has the answer to everything. We have our part to play, too, and from the beginning, my goal has been to make this a good working environment for the NNIT consultants. I hope I have achieved that. I hope they look forward to their work at Lundbeck.”
It’s exactly the sort of attitude that forms the perfect foundation for a win-win relationship built on mutual trust and shared goals.