Helping a Company Outsource Part of Its IT
Find out how BCG helped a bank outsource its IT application management and dramatically reduce its costs.
EuropeanBank is a large European universal bank. It provides a range of banking products and financial services to corporate and private clients, including loans and deposits, securities and custody services, and payment transactions.
Despite earlier efforts to improve IT efficiency, EuropeanBank's IT costs were still above industry benchmarks. BCG was asked to help reduce application management costs—via in-house improvements or outsourcing—and steer the project through the analysis, recommendation, and execution phases.
BCG has a proven outsourcing/offshoring approach. The work we did with EuropeanBank included the following:
Initial Analysis and Scoping: Determine the appropriate scope of applications and services for the first wave of outsourcing.
Request for Information: Identify suitable IT service providers with the required business and IT competencies and the capability to offer long-term career opportunities for EuropeanBank employees who move to the provider.
Request for Proposal/Pre-Due Diligence: Select IT service providers for due diligence and contract negotiations.
Design of Retained Organization: Design an organizational unit and processes to manage the IT service provider and in-house business clients.
Due Diligence and Contract Negotiation: Run an in-depth evaluation process for the remaining vendors and negotiate the final agreement.
Transition: Prepare and conduct transition, including transfer of know-how and transfer of staff and services.
All activities were supplemented by a joint project management office that managed communication, as well as risks and mitigation actions.
We recommended that EuropeanBank execute a structured multiple-vendor selection process to ensure that it received the service standards it needed at a lower price. BCG took ownership of the process and guided the client through the evaluation and selection phases. BCG also supported the design (processes, capabilities, roles, size, organizational structure) of a strong retained organization to manage the IT service provider and internal clients.
Because IT staff were going to be transferred from EuropeanBank to the service provider, we also helped the client focus on internal communication, which was crucial to explain the structural change in the organization.
The project was pivotal in changing the client's mindset from being an internal IT service provider to being an orchestrator and manager of external service providers, while owning the IT agenda for the organization. Our work with EuropeanBank captured annual IT cost savings of 40 percent.