 |
SCHOTT AG is a global manufacturer of specialist glass and glass related systems, mostly marketed under the respected SCHOTT brands. In a groundbreaking deal based on the utility computing model, it has outsourced the management of all of its IT applications and services to HP to improve efficiencies and reduce costs across the organisation. The deal also included transfer of the company’s data centre to HP, along with all its staff and infrastructure. Has SCHOTT seen the expected benefits from adopting a utility computing model, and how well has it worked? |
|
SCHOTT had already moved some way along the IT consolidation and standardisation path before considering outsourcing and utility computing. Much of its IT infrastructure was shared between group companies, with a dedicated data centre at Jena, Germany, supporting users through a Wide Area Network.
However, it was becoming obvious that further in-house consolidation would not be cost-effective without major investments to address serious over-capacity within some of the business units. The argument was strong: SCHOTT wanted to significantly reduce the cost of operating its IT, but only in a way that led to the flexibility and robustness needed by a global manufacturing enterprise.
Experts from SCHOTT’s IT staff recognised that their infrastructure was too heterogeneous and, because most sites had organically developed their own systems, standardisation could well become time-consuming and expensive. And along with a legacy SAP system running on mainframes, any changes would require migration to a new client-server environment and all the risks that that would entail.
The challenges facing SCHOTT were significant and the goals ambitious. SCHOTT believed that outsourcing was the appropriate solution to help realise its business objectives and so embarked on a process to choose the appropriate provider to meet those aims.
|
|
|
|
|
SCHOTT wanted to partner with a full-service vendor who would provide a “one-stop shop” for its IT and application services across all of its line-of-business units. But it also wanted to reduce costs by only paying for those services it actually used.
In a “straightforward” selection process that took less than six months, HP was chosen for its flexibility and structuring – two of SCHOTT’s key priorities. A services-based contract was implemented where SCHOTT would only pay for services used through ‘fixed menu’ pricing from an innovative services catalogue. The contract allowed for usage to increase or decrease on an as-needed basis within a +/-20 percent fluctuation allowance.
So now, whenever SCHOTT’s various line-of-business departments need to tap into HP resources, they order the storage, application time and other services required for any particular month. With the fixed-price list of services, SCHOTT’s service costs are known in advance. IT costs have become production costs, which can now be figured into product costs. And for compute-hungry tasks like product modelling and design – which need intensive but short-term computing resources – SCHOTT simply uses and pays only for services needed in those peak times.
|
|
|
|
|
|
|
As part of the deal, HP is delivering wide-ranging utility-based infrastructure and application management services and support for SCHOTT’s 3,500 SAP users. The services delivered include management of SAP R/3, Lotus Notes, Novell file and print services, traditional voice and Voice over IP services, and various other applications. HP also provides network management for SCHOTT’s Local Area Network, Wide Area Network and web services. Furthermore, the deal also included the transfer of SCHOTT’s Jena data centre to HP, along with all of its assets and 130 staff and experts.
The transition to the HP model took about a year, during which time the companies worked on a fixed pricing model. However, when the transition was complete, the utility model was put swiftly into action, with SCHOTT paying for services based on usage. And this has been a great success so far, with all planned services being delivered as expected.
|
|
|
|
|
|
|
For SCHOTT, the adoption of the utility computing model has been very successful in reducing its IT costs. By the contract’s third year, the company expects to realise an average cost reduction well above 20 percent. The IT infrastructure is now unified, giving SCHOTT greater flexibility and enabling it to maintain high levels of service. Plus, it can now clearly see which business units are using which services, as well as the costs associated with their usage. Looking forward, the SCHOTT/HP partnership is growing. SCHOTT CIO Jan Reller explains, “Not only is HP delivering cost transparency through its service-based pricing, but they’re supporting our international strategy to relocate our production sites close to our customers so we can better meet their demands. HP is also helping our smaller sales offices with their IT issues, giving them the support they need.” SCHOTT expects to extend its outsourcing agreement to include other IT and application services to be delivered on a worldwide basis. And it is fully anticipating similar business benefits to those HP has already delivered – i.e. cost reductions improved efficiency and enhanced flexibility.
|
|
|
|
|
|
German-based SCHOTT AG Group is a recognised leader in glass and glass-related systems, serving a wide range of international markets. Jointly, the group employs approximately 17,000 staff worldwide in its 98 companies, including product divisions and sales organisations across 38 countries.
|
|
|
|
|
|
|
Printable version
