I learned a few helpful lessons about planning procurements while taking a project management course. For instance, I learned that it’s not unusual for an organization to look to the marketplace for major outsourcing needs, especially when it doesn’t have the competency to deliver certain functions internally.
A textbook case springs to mind: when The Boots Company PLC, the U.K.-based pharmacy and healthcare company, retained the services of IBM in 2002, the deal was that IBM would manage the company’s IT infrastructure. The 10-year contract, which was worth US$1.1 billion, was expected to save the company US$203.9 million, compared with the cost of running its own systems. At the time, more than 400 Boots employees joined IBM as part of the agreement.
By 2006, Boots’ pharmacy system and systems applications and products rollout was complete, and in 2008, the company announced it would have up to six different suppliers competing to supply its IT products over the next year.
The example can be easily translated to business systems in the pensions and investments sphere, which, in Canada, has not developed separately from the way other outsourcing markets evolve. Today, outsourcing is viewed as a viable approach to strengthen core business and as a way to wring opportunity from a challenging environment. Organizations are likely focused on developing strategic partnerships (the current stage in the evolu-tion of outsourcing) to bring about enhanced returns.
A robust example is currently underway, as Marcia McDougall discusses in “Hands-free Service”. In this case, Morneau Shepell acquires Mercer Canada’s pension and outsourcing business and expects to invest more than $20 million over a three-year period in systems and service improvements. The assets for the business were received for no cash consideration, and the transaction is expected to be accretive in 2013.
To state the obvious, Morneau’s procurement policies will require comprehensive due diligence. And, looking ahead, agility and speed to market will underlie its comparative advantage as risk-aware investors refine their expectations—yet another lesson the project management course taught.
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