Outsourcing Fuels British Nuclear's Future
Client: British Nuclear Fuels (BNFL)
Challenge: Facing privatization, BNFL needed to unify its disparate elements on a single IT platform while significantly reducing IT costs.
Solution: CSC implemented a business change program, including infrastructure upgrades, a suite of project and financial applications, and training for BNFL staff.
Results: In just the first of a five-year term, CSC achieved 10 percent of a guaranteed 30 percent reduction in BNFL’s IT operating costs, enabling BNFL to make its entire enterprise more competitive.
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When British Nuclear Fuels (BNFL) faced new decommissioning and privatization challenges, it knew sweeping changes to the business were in order if it were to successfully compete in the open market. Knowing that IT transformation would be vital to this effort, BNFL called on CSC to deliver a unified system that would improve operational visibility and cut IT costs by nearly a third.
“CSC responded very positively to address significant changes in our business environment,” says Brian Tenner, finance director of British Nuclear Group (BNG), the business unit BNFL created to tackle decommissioning. “The increased functionality and simplified business processes resulting from the business change project will deliver significant benefits to the business, and provide a robust IT platform in support of our future strategy.”
Partnering for success
When the Department of Trade and Industry — BNFL's sole shareholder — began to review the nuclear industry in the late 1990s with an eye to eliminating liabilities and offload assets, it became apparent that BNFL had to prepare for some dramatic changes. If privatization were in store, BNFL would need to upgrade and unify its IT infrastructure, or it would never attain the efficiency and flexibility needed to compete.
“BNFL looked to CSC to provide the expertise and knowledge to help us navigate this journey,” says Dominic Fitzsimmons, BNG’s IS director.
BNFL needed an IT partner who could meet these requirements while delivering cost and operating advantages. CSC already had a proven track record as an IT outsourcing partner to BNFL and proved a natural choice. BNFL planned to restructure into five business units, each operating autonomously within their own budgets while also taking advantage of the economies of scale provided by CSC shared services.
In 2000, BNFL and CSC signed a five-year outsourcing contract valued at $87 million. As part of the agreement, CSC acquired 100 percent ownership of ITS, BNFL’s professional IT subsidiary, and 500 employees transitioned to CSC. CSC provided the full spectrum of IT services, including network, server, desktop and applications support for legacy systems and new applications, including PeopleSoft and SAP. CSC delivered the upgrades on schedule, including an integrated suite of project and financial control processes and training for BNFL staff. CSC now manages and supports BNFL’s IT operations for 12,000 users located across the UK.
“Throughout the transition project, CSC delivered against challenging and robust requirements, providing technical, operational and change management expertise,” says Fitzsimmons.
Staying on course
Following a government review, the Nuclear Decommissioning Agency (NDA) was established in 2005 to oversee the closing and clean-up of the obsolete parts of the UK’s civil nuclear program. The NDA was also charged to introduce competition for nuclear site management and outsourced services. BNFL transferred all its nuclear assets to the NDA and was charged to maintain them until open bidding on their management is concluded.
BNFL signed a further five-year, $135 million contract extension with CSC in 2005. CSC guaranteed to reduce BNFL’s IT operating costs by 30 percent over the new term, enabling BNFL to make its entire enterprise leaner and more efficient. As part of the contract, CSC underwrote a fixed-price reduction profile and took on all of the risk of achieving the necessary operational cost savings.
"We are already delivering savings to BNFL’s customers due to the reduction in costs within the new contract which CSC and BNFL have jointly managed,” says Fitzsimmons.
Just one year into the new five-year term, CSC has already reduced IT costs by 10 percent, says Ross Hopcroft, CSC’s utilities director for Northern Europe. The partnership has proven beneficial for CSC, which is developing its presence in the European utilities industry, and for BNFL.