Energy and Utilities

A Fortune 500 energy company uses location optimization analysis to help it evaluate risk and determine offshore suppliers’ ability to provide short- and long-term Application, Development and Maintenance (ADM) support

Scope: IT – ADM
Geography: North America

Situation
The deregulation of the energy market has increased competition and created pressure for increased operational efficiencies.  This energy and utility company needed to cut its operating cost significantly. It was using a complex IT infrastructure and ADM environment to deliver services to various LOBs, which limited its ability to provide the service levels needed to build both its customer base and customer loyalty.

Approach and Solution
The client decided to investigate outsourcing its IT infrastructure and ADM support.  A preliminary analysis found a significant cost reduction opportunity in using an offshore delivery model for both. The supplier-proposed solutions consisted of performing service delivery from various global locations in the U.S., India, South Africa and, Philippines, so a location optimization analysis was used to determine the most viable supplier solutions.

Result
The analysis outlined a ranking of the proposed supplier solutions based on the client’s risk profile and the sustainability of the proposed solutions. These results were then incorporated into an overall evaluation of the various solutions to determine the best path forward for the client, minimizing operational risk while maximizing long term cost savings. The client is currently finalizing contractual terms with the supplier who had the preferred location and solution.
 

 A major energy company engaged Everest Group to determine if outsourcing would add to the overall value for the company

Scope: IT – ADM, and IT – Infrastructure
Geography: North America

Situation
The nation’s largest gas pipeline company wanted to determine what savings could be achieved by outsourcing its applications or infrastructure areas, and asked for solution options.

Approach and Solution
Everest met with key stakeholders to determine the level of support for outsourcing across the organization. We then collected the infrastructure costs and ran a comparative analysis against our database of IT costs from outsourced transactions to determine savings potential in that area. In applications, we utilized our proprietary methodology for determining what proportion of the applications costs could be sent offshore and what the savings potential and risks would be. 

Result
Analysis showed that only minimal cost savings would be achieved by outsourcing infrastructure so we recommended against this.  Outsourcing applications did show some savings, but because there was some hesitancy on the part of the process owners to send this offshore, it was not immediately pursued. Instead, the company applied some lessons learned from outsourcers to improve its internal service delivery effectiveness.