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P&G-HP Pact: Slow and Steady

By Larry Dignan Print this article Print

Procter & Gamble's outsourcing deal with Hewlett-Packard has used a stable, no-frills approach to make the consumer-product giant's technology infrastructure more efficient.

Procter & Gamble chose a simple strategy for the first year of its $3 billion technology services outsourcing pact with Hewlett-Packard: Don't screw it up.

No major restructuring of services or staff out of the gate. No high-cost implementations of new services or software. And, in particular, no interruption or degradation of the technology for supporting call centers and for managing its networks.

The go-slow strategy came after a whirlwind courtship that ended when Hewlett-Packard-not Affiliated Computer Services or Electronic Data Systems-became P&G's key computer services contractor on August 1, 2003.

Linda Clement-Holmes, manager for global business services infrastructure and information-technology governance at P&G, says the strategy was born out of necessity.

It took just 94 days for the HP outsourcing pact to go from request for proposal to signed contract. Then, within 90 more days, HP had to absorb P&G's three data centers in Cincinnati, Singapore and Brussels, 2,000 employees, its network infrastructure and its technical contracts.

With a 10,000-page contract and about 3,700 tasks to hand over-involving everything from network administration to payroll to mainframe management-P&G and HP determined it was too risky to change so much so soon. The companies adopted a "where is, as is" strategy in which HP initially just put P&G's technology operations and workers on its books.

"Granted, we were pushing off savings a bit, but our main goal was to cut over and maintain a stable environment," Clement-Holmes says.

P&G is currently in a multiyear "transformation" that calls for HP to absorb P&G's technology infrastructure and make it more efficient, according to Clement-Holmes. The key tasks are revamping business processes and helping P&G effectively deploy wireless computing technology and radio frequency identification tagging. P&G evaluates HP's performance quarterly using criteria such as network uptime, data center availability and response time on complaints. Qualitative measures on customer satisfaction are developed by polling business-unit heads who deal with HP on an ongoing basis.

"We want to take it beyond the service level agreements," Clement-Holmes says. "You can have great SLAs and unhappy users and clients."

These measurements are reviewed at the highest level of both companies. Ann Livermore, executive vice president of HP Services, and Filippo Passerini, P&G's chief information and Global Business Services officer, each gets a copy.

Clement-Holmes wouldn't say how much P&G expects to save or how much savings HP already has produced, but says she's satisfied with the setup. HP has integrated much of P&G's operations such as its data and call centers around the world, mainframe management and network monitoring systems. Meanwhile, HP has absorbed 98% of P&G's 2,000 technology workers. HP isn't finished taking on P&G's infrastructure, but the company is "well along on that path," says Dan Talbott, HP's client manager for P&G.

Next Page: Exceeding critical measures.

This article was originally published on 2004-07-29
Business Editor
Larry formerly served as the East Coast news editor and Finance Editor at CNET News.com. Prior to that, he was editor of Ziff Davis Inter@ctive Investor, which was, according to Barron's, a Top-10 financial site in the late 1990s. Larry has covered the technology and financial services industry since 1995, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine. He's a graduate of the Columbia School of Journalism.
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