Our client was looking to modernize their mainframe applications. They had a 7-year plan to replace their legacy applications. Their IT staff handled day-to-day operations, mostly focused on “putting out fires.” The company hired a new CIO who wanted his staff to focus on new applications and the strategic initiatives of the business. The CIO also was tasked with cutting operating costs. The IT department was getting hit with high upgrade costs from software providers and wanted to smooth out their capital expenses. And because they were in a rural area, there was a shortage in the mainframe staffing marketplace. They also had problems testing their Disaster Recovery plan.
The company looked at labor arbitrage using outsourced personnel but could never financially justify it or feel comfortable with it – especially since the most economical choices were off-shore. They also had discussions with a large outsourcing vendor. The vendor couldn’t save them any money so the vendor wanted to increase the scope of the project and outsource the applications and the entire data center, a solution that was neither cost-effective nor appealing to the company.
Accelerated Outsourcing was engaged to analyze their mainframe environment. We determined that outsourcing might be a good solution to their problems. Our initial Cost-Benefit Analysis indicated that there was enough savings to generate an RFP and solicit bids from the marketplace. After we developed the RFP and analyzed vendor responses, we helped them negotiate a contract with an excellent vendor.
Our client was able to reduce their operating costs by 22% or $1.1 million annually. The vendor now provides Disaster Recovery testing for them, and has mitigated their risk by processing their environment in a hardened facility. The organization can focus on strategic initiatives and project work instead of day-to-day operations.