Insourcing the IT Organization
A Minnesota-based medical device manufacturer
Insourcing the IT organization.
A global medical manufacturer was not achieving its expectations of outsourcing its IT function to a global IT outsources. Cost savings and service levels had not been met, yet the outsourcer had demanded increases in the ongoing operating costs for providing its outsourcing of IT services. Endurant was asked to prepare a plan and budget to establish an internal IT function to replace the IT service provider and save 25% of the operating expense.
Using their change management methodology, Endurant worked with the Chief Financial Officer and members of the leadership team to develop a business model for the IT organization that integrated with the business model of the enterprise. Key for the enterprise was the development of an IT governance process that would involve the major business units located throughout the world with the direction and oversight of the IT function.
- Operations Assessment. Using their change management methodology, Endurant analyzed the company’s business model and need for IT services identifying the “hot spots” on which to focus business performance improvements.
- Future Market Position. Working with the executive team, Endurant’s organization architects identified the future position of the enterprise and the critical IT requirements for them to achieve that position.
- Business Models. Based on the client’s customers and business units’ expectations and requirements for IT services, the architects designed a set of organization blueprints for a highly effective way of doing business-based internet technologies.
- Process Flows. To fully utilize the power of the IT resources, Endurant defined significant changes in the current IT processes to support a set of best practices. They identified operating principles and behavior traits as a base for the culture consistency of the IT function with the enterprise.
- Governance. Endurant defined a process of decision-making and priority-setting to involve executive management via an IT Steering Committee, Program Management Office (PMO).
Within ninety days of the transformation date, the client was totally in charge of its IT function. All mentors and coaches were removed or hired by the client. The new process resulted in a 37% reduction in operating expense over the services provided by the global outsourcer.
The Bottom Line
Endurant’s client exceeded their objective to reduce the IT operating expense by twelve percentage points (37% – 25% = 12%).