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Chris O'Brien, CIO, City of Chicago; Bob Kolman, Managing Deputy, CIO, City of Chicago; Cathy Adduci, Vice President and General Manager, North America Midwest Region, Unisys Global Infrastructure Services; Peter Bendor-Samuel, CEO, Everest Group and Outsourcing Center

"There's no reason why outsourcing works in some places and doesn't work in other places, other than the particular environment that it's in," states Chris O'Brien, Chicago, Illinois' CIO. "And Chicago is about as complex an environment as you can get - from the policemen on the street, to the inspector in the field, with political people and a 24-hour operation. If we can make it work, there's no reason why other governments can't make it work, if they want to and if they have progressive leaders."

Until service provider Unisys joined the city's efforts at modernizing and improving its IT operations, O'Brien didn't realize how much of his staff's time each day was spent on worrying whether a department head's or commissioner's computer was going down, or a server crashing here, or a network outage there. Getting five to seven escalated support calls a day prevented the IT organization from accomplishing its real mission.

City employees were not faring well before the outsourcing initiative either. O'Brien says user satisfaction levels were "abhorrent." Service levels were non-existent; it could take more than a month to get a PC repaired. IT support in the "windy city" was as unpredictable as a feather in the wind.

Quantum Leap

Outsourcing was a fairly mature industry in 1996 when Chicago's leaders were considering outsourcing their IT processes, but it was still mostly untried in local governments. Unisys stood out among other providers bidding for the project in that it was the only one not responding with a boilerplate methodology to apply to the city. Unisys, as O'Brien recalls, was the only one that took the time to understand Chicago's specific needs and unique operating environment. Accordingly, Unisys decided to tailor its model with a lot more onsite support management.

Original objectives of their 1999 contract were focused on predictable service levels, increased user satisfaction and cost predictability. Pricing for services was capped at a certain dollar amount over the life of the five-year contract, giving the city a predictable spending level and allowing Unisys to make money by introducing efficiencies.

There were some who resisted the outsourcing initiative in the beginning, but a combination of careful handholding and strong communication removed some initial reservations. O'Brien explains that Mayor Daly was firmly 100 percent behind the outsourcing model. His message was that outsourcing is the way of the future, and it especially needs to happen in local government.

So expectations were high, but the first year of transition was full of tough challenges. First, the city didn't have a good asset inventory; so Unisys had to determine what equipment the city had, what software was loaded on the PCs and where everything was. "We underestimated the amount of work it was going to take for them to come in and take over 15,000 desktops that had hundreds of different makes and models of machines and hundreds of different types of software loaded on them and almost no standards," states Chicago's CIO.

In the midst of asset inventory efforts, Unisys also had to replace 7500 PCs. All this was happening in the middle of Y2k compliance efforts. "We never would have been able to get the Y2k work done, were it not for Unisys," O'Brien states. "They just airlifted bodies pretty early on to do PC replacements and things like that; otherwise we would never have made it." Meanwhile, a third major project - implementing a city-wide customer service 311 system - was underway at the same time. He describes the environment that outsourcer Unisys walked into as "chaos." He adds: "But I don't know how it could have been different, given the shape we were in and with Y2k."

Bending Without Breaking

A year into their relationship, O'Brien says they realized something was wrong. As originally structured, the service level specifications measured the provider's performance primarily by problem resolution rate. "We needed to change the way we were managing - from looking at every single trouble ticket to see if it was done in four or 12 hours, and look, instead, at the overall satisfaction level, along with root causes of satisfaction and dissatisfaction. We wanted Unisys to be responsible for identifying those things to us and proposing resolutions."

Measuring time and driving toward that type of response was not the best way to deliver service that would meet the city's objectives. Since they really wanted to know whether employees were happy, received what they needed and that the service met their expectations, the city and Unisys changed the service level measurements to be a satisfaction-based model. Now, after every trouble ticket is closed, it generates an email satisfaction survey to the end user.

It was, perhaps, the ultimate demonstration of flexibility. Shifting from a time-based to a satisfaction-based measure, impacted Unisys' original pricing proposal on services required. "Unisys really was right there along with us, saying: 'This is the way we will structure our operation.' They have been extremely flexible," states O'Brien. "They're now really not doing what they originally signed up to do."

The city had to be flexible, too, in requests from Unisys. The provider needed to enforce standards and not allow every PC to have its own image or allow different hardware for some people. This was a struggle for user buy-in at the city; but the CIO says they eventually bent to accommodate Unisys' request, recognizing that it helps the provider's cost model and ability to stock parts. Coincidentally, it also dramatically improved the reliability of Chicago's IT environment.

Today, the two parties jointly operate with a holistic approach to outcomes. They're doing well together. In the second year of the outsourcing agreement, Gartner studied the user satisfaction rate, comparing it to the pre-outsourcing benchmarked level. Prior to outsourcing, satisfaction was at a low 2.1 out of 5 level. By the second year, it had jumped to 3.7 out of 5. Gartner had never seen a jump that large in that short a time period in its entire customer satisfaction database and followed up with a white paper about this relationship. It's titled: "Outsourcing Works!"

Indeed, it does.

Publish Date: May 2003

Copyright © 2003 - Everest Partners, L.P.

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