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Tim Murtha led Sunoco through its IT transformation. At the outset, the in-house IT department delivered 90 percent of the organization's infrastructure needs. Today, Sunoco outsources 90 percent of its infrastructure to multiple suppliers, including (i)Structure.

Murtha discussed the transformation at the Gartner IT Outsourcing Conference in April. I attended the conference. These were the leading questions and answers:

Q: Doesn't multisourcing create additional cost because you have to manage multiple suppliers?
A: Not necessarily. It starts with understanding your company's desires regarding outsourcing. Does your company want to outsource all its IT, or does the corporation plan to retain some level of internal competencies to manage the IT environment? In our case we anticipated an internal IT group would retain the management, architecture, and standard-setting responsibilities. Additionally, our IT department would be responsible for business unit service delivery and customer relationship management.

Q: Given the complexity of today's IT environment, how many providers can truly offer all the required services without subcontracting to specialty providers?
A: In our case we analyzed the service (work) clusters and grouped like services and/or work together to develop natural outsource domains.

Q: What was the biggest positive surprise and the biggest negative surprise you found on this journey?
A: In all cases each services agreement came with value-add components. With our email agreement we also received virus blocking, resulting in a volume of blocked viruses far greater than anyone could have imagined. Internet services provided intrusion detection services; data networking offered Web access for our internal engineers to the Concord system that monitors the overall health and network performance. The helpdesk agreement offered our internal staff Web access to the request tracking system. Overall in each case we received user (operational) access to contemporary infrastructure applications (middleware) for use by our internal infrastructure staff.

Q: Could you throw some light on how Sarbanes-Oxley (SOX) compliance helped you at the infrastructure layer?
A: SOX is infrastructure service's best friend. Given today's technology penetration within households, many feel managing desktops and servers is no different than one's home PC. Incorrect perception. To manage a network of PCs or servers you must have a common set of processes and procedures to meet the daily delivery requirements. SOX insisted on a consistent authorization and access process which plays to infrastructure strengths. Additionally, SOX helped ready the corporation's IT for outsourcing, as a key strategy for successful outsourcing is the consistency of process and procedures.

Q: What are the top three lessons you learned during your transition to outsourcing?
A: 1) Many today say IT does not do projects well regardless of the company. The marketplace providers are positioned to reverse this perception.
2) One must continually work with the internal staff to remove the stigma of "supplier versus us" mentality and move to the position of maturing to a true delivery relationship.
3) The internal staff must be prepared for new learnings and acceptance of new work.

Q: Are you using any tool to monitor the multi-vendor environment? Or have you automated the performance of the outsourcing environment?
A: We've implemented no formal tool(s) at this time. Each of the "base & extended" service providers have committed service level agreements (SLAs) for delivery, whether transactional or availability. Members of the infrastructure services management team meet with each of the base service providers monthly and the extended service providers quarterly to review how well the contracted service levels are obtained.

Q: I'm curious to know how large is the internal staff managing those suppliers in those three layers of services (excluding what you keep in-house)?
A: Down from just over 100. In 1999, when I departed the internal infrastructure services team, there were just over 30. The internal resources are focused on service management covering three broad categories: technical services, integration services, and service management.

It should be noted that integration services staff is directly related to the number of the manufacturing facilities within Sunoco. Each of the major facilities has two internal infrastructure representatives on-site responsible for the delivery of the entire infrastructure services portfolio.

Q: What challenges have you experienced with outsourcing as you move closer to the manufacturing control and lab systems?
A: The single biggest challenge was the definition of business layer IT versus the process layer support requirements. For true process control, the challenges were minimal if non-existent. Where it became difficult was with those systems and/or an environment that tended to be more process monitoring than control. In the past years it was not uncommon for process engineering to implement process monitoring environments that the process control group could not support, so the organization would look to IT for support. As we began our initiative to outsource business layer infrastructure, the most significant challenge was the redefinition of process monitoring systems to be included in the process control layer and not within the scope of the outsource agreements.

Publish Date: July 2005

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Copyright © 2005 - Everest Partners, L.P.

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