The 'in' thing -- firm insources for IT overhaul

Outsourcing may be all the rage these days, but one firm went the insourcing route with great success.

The IT infrastructure supporting the global offices of Lend Lease Inc. had grown to become a decentralized, disorganized collection of disparate systems. But thanks to insourcing and a multi-faceted reorganization initiative called Project high-RISE, all that has changed.

Lend Lease's story began about 18 months ago after the company, which has regional headquarters in New York, Sydney and London, decided to change the way it handled IT infrastructure operations. With more than 20 operating systems supporting about 500 project sites and office locations in more than 40 countries, it was clear that the time to streamline infrastructure management had arrived.

IT set out to reduce costs, centralize management, and consolidate to provide better service to end users. On the business side, Lend Lease wanted to "externalize" its network through the Web and increase collaboration with partners, staff and customers.

But all this would not be easy. The two halves of Lend Lease's business -- financial services and construction site management -- had security needs that seemed diametrically opposed. Financial services demand the highest level of security to protect customers' funds. End users on the construction side need to access a network through various types of connections and from a wide range of locations.

With that in mind, Lend Lease's CIO, Jay Skibinski took the unique step of appointing their CSO, John Miles, to head up the project. After weighing the pros and cons, Miles and his associates bucked the current trend of farming out IT work and decided to insource the entire job.

"We came to the conclusion that by outsourcing, the risks would be much higher than the rewards," Miles said.

Those risks included the cost of moving IT operations, the possibility of failing to meet service level agreements during such a move, and the possibility that outsiders wouldn't be as careful when it came to system security, he added.

How they did it

The first step of the reorganization was to consolidate the company's many data centers into one shared technology center in Atlanta. Today, the company handles most of its global infrastructure management and support from that location. Lend Lease also has minor data centers in London and Sydney, which are used to handle field support in those areas.

After consolidation was completed, the thrust of Project high-RISE (which stands for Remedy service management, Identity management, System and security management, and Endpoint management) could begin.

Lend Lease worked with six separate software vendors to get the job done. They included ManageSoft Corp., NetIQ Corp., Remedy, M-Tech Information Technology Inc., Microsoft and Oracle Corp.

The NetIQ, ManageSoft, and M-Tech products were interfaced with the Remedy Action Request, Asset Management and Change Management systems, which helped speed up response times. It also meant that help desk workers would now be working from one primary system.

"By taking feeds from all these systems we're better able to do much better analysis on how we're performing against service levels, how we're meeting customer needs, and how efficient we are at answering the help desk tickets," Miles said.

Results

Today, Project high-RISE is nearly completed. Miles said that his company has succeeded in consolidating its network to support the financial institution and opening up the network to projects sites and thousands of subcontractors.

The company is now better able to track hardware and monitor service levels. It's also been able to maximize the effectiveness of its customer service portal, the Oracle Collaboration Suite, by converging applications onto the Internet.

Miles said that one of the keys to the success of the high-RISE was getting the vendors to work closely with each other.

"At the beginning of the project … we brought all of our vendors together [and took] them through a two-day session so that we could all agree upon critical tasks and integration points," Miles explained. "One of the shining stars is that all of this has come together in a very short timeframe."

Insourcing vs. outsourcing

Unlike Miles, many executives working today aren't willing to take on the responsibility of a major insourcing initiative, said one consultant who specializes in such projects.

"The biggest challenge with insourcing is whether or not the executive is willing to take the risk," said Amit Maheshwari, CEO of Cambridge, Mass.-based i-Vantage Inc. "If that [project] doesn't work, then there is no one to point to."

One thing a company should consider when deciding whether to insource is how quickly a job needs to be done, Maheshwari said. If it must get finished immediately, then outsource. But if there is ample time to put the right team members and equipment in place, then insourcing is the way to go.

Lessons learned

All of the success Lend Lease is realizing with Project high-RISE did not come without a price. One of the painful lessons of insourcing is that like outsourcing, it too can end up costing people their jobs.

Lend Lease reduced IT headcount by about 30% over the last two years and throughout the consolidation effort. Most of those jobs, Miles said, came from the company's applications, infrastructure management and global management teams.

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Going forward, Miles said that his company is committed to increasing training and enhancing the skills sets of the remaining IT employees.

"We've reached a point now where instead of doing more cuts, we're trying to upscale and diversify the workforce," he said.

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