Application development & maintenance for consumer products company

Until 2006, IT was decentralized for this global consumer products company. Each of its 64 country markets around the world was serviced by local IT resources. IT capability was generally developed locally, resulting in highly customized legacy applications, including mainframe and client server applications.

To improve IT service and efficiency, and reduce costs, the company embraced a very aggressive "Flight Plan" of projects to replace all major legacy applications with new scalable Enterprise Applications by 2010.

Challenge
This massive project of 1,000 global application development and maintenance (ADM) faced two critical challenges:

• Majority of the staff had only the skills needed to support the legacy portfolio, and neither the technical capabilities nor the mind-set to deliver future business needs
• Immature IT processes and governance resulted in poor service quality as IT attempted to deliver projects in a more centrally-coordinated model, while leveraging globally-distributed resources

Approach
The consumer products company engaged A.T. Kearney to define their next generation delivery model for IT applications development and support. The team’s approach comprised the following key components:

• Established a detailed baseline of the company’s ADM scale and capabilities through interviews, surveys, and site visits of key ADM centers
• Conducted a System Development Lifecycle process maturity assessment to identify the root causes of the issues impacting the organization’s performance
• Established a multi-year ADM demand plan across projects and legacy support to identify and define key dependencies in developing recommendations
• Worked with vendor partners to gain increased scale and fill commoditized skill needs, while emphasizing and retaining IT’s critical business, process, and technology knowledge
• Established a new operating model with enhanced demand planning, portfolio management, resource management, and project management capabilities
• Developed a comprehensive implementation plan and supporting business case

Results
The team identified annual run rate cost savings of $18 million, gained through a more robust plan to retire legacy applications and improve use of low cost vendor resources.

The project also delivered significant service improvements:

• More flexible and scalable delivery model with improved consistency and quality of project delivery
• ADM resource capabilities for supporting the future state application portfolio
• More mature, industry-standard ADM processes to increase vendors’ efficiency and effectiveness