By Jim Battey Sun Microsystems has been a major technology innovator since it was founded in 1982, delivering industry-leading server, workstation, storage and software solutions. The company continued its spirit of innovation when it signed a comprehensive application outsourcing agreement with CSC in 2005.

Sun selected CSC to manage their full portfolio of internal business systems. The main selection criteria used were confidence in a partner’s ability to accomplish outsourcing goals and to step up with creative solutions that both companies could deliver to an evolving marketplace.

The agreement itself wasn’t a breakthrough achievement as it included the common objectives of reducing IT costs, turning fixed costs into variable ones and being able to scale services up and down quickly. However, the aspects of Sun’s approach that set it apart included an extremely aggressive timeline for offshoring the application work and an opportunity to increase Sun’s revenue potential. The result was a partnership in which Sun and CSC became customers for each other’s products and services, as well as partners in go-to-market initiatives.

Working to an aggressive timeline

To help realize a rapid reduction in its costs, Sun want¬ed to move 60 percent of their application development and support work offshore in just eight months. Sun also wanted the outsourcing and offshoring to be done in one step, i.e., both starting on the same date. So on May 1, 2005, when Sun employees transitioned to CSC, CSC India employees also arrived in the United States to start the knowledge transfer process.

The eight-month schedule originally applied only to Sun’s U.S. employees. But one week before the contract was scheduled to commence, Sun requested that CSC cut costs even more quickly by compressing the European rollout schedule from 12 months to eight. CSC agreed.

While there are benefits to doing so much offshoring in such a short time, it is also somewhat risky. Sun realized a quicker financial return — the shorter European schedule saved an additional $2 million — the knowledge transfer took less time, and there was less emotional turmoil among the transitioned staff. In addition, CSC also had to deliver immediate pro¬ductivity gains — supporting the same amount of work with 41 fewer employees than Sun had previously doing the same work. CSC and Sun collaborated to successfully manage the risks while completing the transformation.

The offshoring was made possible by building out new capabilities in India. People were hired, facilities were expanded, networks were implemented and data centers were built out. As the transition got underway, CSC landed a team to inventory and document the existing applications and processes. A comprehensive training program was developed and delivered to the new employees. Thorough skills assessments were used to ensure that the level of learning was adequate to support Sun.

Service level agreements are used to monitor the level of support on an ongoing basis. Leadership in CSC India concentrated on delivering outstanding service by hiring the right people. This has been accomplished with such success that CSC India has received a number of awards as a leading employer of choice in India.

Building a partnership

Sun and CSC soon realized that the offshoring part of the contract presented organizational and technical challenges that could not be overcome with a typical IT outsourcing governance model. The two parties adopted a partnership model, which was particularly important during the aggressive transformation effort.

They established a Transformation Program Office that better aligned the two companies by providing a Sun counterpart for every CSC member. The office set up a knowledge transfer database that showed every member the status of each knowledge-transfer effort — both sender and receiver — so that Sun and CSC could work on issues together.

Customer satisfaction surveys not only measured CSC’s performance, but also that of SunIT (Sun’s name for its IT department). Where corrective action was called for, both jointly defined a plan. Sun was firm in the belief that both parties owned the resolution of critical issues. Sun SMEs helped resolve issues — including jump¬ing in to help with system outages — and they were also involved in CSC projects. Sun and CSC teams worked together to share and select best practices to continually improve the way the IT services were delivered.

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