RSA chief uncans insurance giant's mega IT infrastructure review Zurich Insurance, Europe’s third-largest insurer with $70bn in revenue and 55,000 staff, hinted last week that it might buy RSA Group. Yet six major acts of M&A have saddled RSA with 15 data centres, managed and run differently and propping up a creaking architecture. Worth £4.5bn and with 19,000 staff and 20 million customers …
"companies he claims guarantee their customers cost reductions through advancements in technology while helping them to simplify their business processes."
Yeah, right. Everyone says that and talk is cheap, proof will be in a few years time. Or am I just a jaded Brit who has seen this outsource/insource/onshore/nearshore/offshore/automate/amalgamate/split lots/towers/on-premise/cloud/death-of-mainframe/pc merry-go-round quite a few times over the last 20 years? (of course I am)
the 'Price' is right!
He is correct about their systems being in a mess. I wanted to make a change to a policy (hence the A/C) but my present insurer could not quote for it. Going through the whole 'enter your details' malarkey again I was quoted by another member of the RSA group for a new policy. Getting the old one cancelled (no such thing as a transfer) with the cancellation fee etc etc etc etc was too much so I let the old policy lapse and took up a new one but with another totally different company. No more RSA business from me then.
There have been occasions in the past where a CEO or their business triumphantly announces that IT is the corner stone to their improvement; but then happily either outsources to the cheapest bidder or slashes their internal arrangements to the bone (sometimes doing both). In virtually every such case, the business then experiences horrendous problems.
It's therefore a bit refreshing to hear from someone that does seem to have taken notice of where the problems occur and is actually showing some indication of being prepared to actually invest in the IT provision, rather than just treat it as yet another cost on the company. Hopefully, he will get the chance to carry out the necessary changes.
Unfortunately, I suspect that he may find that the other stakeholders are still of the old school that think they need to replace the expensive local technical people with cheaper drones from the other side of the world; and he may discover that he spends more time arguing the toss with them, than he's allowed to spend on actually getting his systems updated and working.
The same place they learn to say
"I want us to own architecture and design and core principles, working with the best partners in the market around emerging technology trends and looking to how the market is changing."
Equally content-free
BTW, precisely what business benefit is being delivered upgrading from W7 to W8.1 ?? Other than "new shiny" (which was what my CFO wanted most of all from the move from XP to W7 back when)
Interesting that Price decided to be a leader and kicked off a migration to Win 8.1 while it has a tiny market share. I doubt that share will get much bigger either while Microsoft's is punting Win 10 adware to every Win 8.1 box that is listening in a bid to move everyone off 8.1. With any luck Microsoft and all the ISVs that Price purchases stuff from will support Win 8.1 until 2023 as promised, I can't see it personally, but I guess that Price will have moved on to something else more glamorous by then so it will be someone else's problem.
Taken at face value it doesn't make sense, but I think he's agreed to do the article with a motive in mind.
With the RFP out there he's firing off warning shots to the incumbents (IBM/Accenture) that he's ready to walk away if the terms of the renegotiation aren't to his liking. And furthermore Wipro, Tata et al are very viable alternatives if need be.
Mick
And furthermore Wipro, Tata et al are very viable alternatives if need be.
No they're not. ITOs share a common business model: Promise 20% savings against the incumbent provider, write a complex SLA where the vendor knows all the caveats and get outs (from experience) whereas the buyer knows none (doing this once every five years at most). Then take a seven year deal at a nominal loss, wait for inevitable variations and business change, and coin in during later years. There's even a term for this, "back loading", and my employers are currently in the phase that involves being reamed out by our IT "partner".
This situation is made worse by the common practice of building your ITO through acquisition, which leaves vendors with a balance sheet weighed down with vast amounts of "goodwill" (the amount they paid for acquisitions beyond their real worth). Unfortunately, the goodwill is capital on which the ITO have to make a return for their investors. This means that even if they do employ the cheapest of cheap, barely literate monkeys, the costs they have to recover from customers exceed the amount the customer was paying for inhouse and onshore skills in the first place, although because backloading gives a couple of years cheap it means that most customers can pretend that they've saved money. Although the converse is that those losses need to be made up by much higher charges in the later years, over and above the illusory "savings".
By the time the customer is paying the true cost, its been management musical chairs at the customer, and nobody remembers how much it cost in the first place, nor who made the decision to outsource. The skilled employees have retired, been P45'd or TUPE'd out, and nobody has the balls to even think about bringing IT truly back in house.
Outsourcing is the business equivalent of selling your kidneys - you only benefit on paper, and once you've done it you can't go back.
Their last attempt to move off mainframe involved copying the entire codebase to microfocus cobol on Windows running against DB2 on AIX. Its performance was special, in the Olympic sense.
Infrastructure was underinvested (generic storage rather than performance tuned) but the main issue was that no one was willing to invest time or money (though Accenture would have been willing to spend both, endlessly) to redesign the solution.
The main problem is that whether it goes to the cheapest body shop in India, or into an office down the road, companies lose control of their systems to a disinterested third party. I've worked on both sides of the fence and this is the one truth that cuts through the debate. Once a company outsources, IT is no longer strategic no matter what anyone says. The outsourcing company takes a "we pay you for this, don't bother us with IT stuff anymore" attitude, and the company doing the work will now do the bare minimum to keep from losing the contract. There's no smoking gun (yet), but I'm convinced that's what's behind some of these high-profile security breaches...a service provider that barely cares, providing service to a company who doesn't want to know how things work anymore. It turns IT into a big mediocre mess.
The real question is not if outsourcing works but can it massively reduce costs in the short term so I can get my bonus? As for the longer term result well I will be long gone by then (and if not you will pay me to leave) so who cares?
Signed, half the C Suites out there (being generous so I don't seem cynical).
Ok...so, if you are a tech company, getting in someone to run your onsite canteen is probably good...
But...lets say you are a *MAJOR* OEM with customer contracts to supply engineers at a moments notice to some of the biggest companies in the world - banks, governments, etc...and you just gift the majority of your customer visiting engineers to several outsource partners....
The outsource "partner" engineers are no longer employees or based in your buildings, so why would they need to login to your systems....they can get all their work sent to them by emails to their personal accounts....like HOTMAIL and GMAIL....
They dont need to gain access to buildings, and dont have an account, so, why issue them with an ID either - lets give them something less than the cleaners of the buildings get and put their pic on a bit of plastic with the company logo.
This means that you are sending, dis-interested, 3rd party engineers, who have shocking levels of training, do not feel affiliated in any way with the company they are representing to some of that companies most important clients who are paying through the nose to get support.....
No wonder Sun failed!
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