Company Reduces Costs By 21%
Client able to reduce their mainframe operating costs by 21% ($3.2 million over 5 years) and limit their exposure due to a lack of staff.
One of the largest providers of indexed life insurance and annuities products was running their critical applications on a mainframe that was outdated and understaffed. Their data center did not have adequate power backup and they were experiencing outages. They were also running an unsupported operating system. Because of some unforeseen circumstances, they went from four systems programmers down to one. Also, because of the lack of staff, they did not have the time or resources to do a proper Disaster Recovery test. Their mainframe lease was expiring and they were considering another long-term lease (3 to 5 years), but did not want to put forth a substantial capital investment. The mainframe was running their critical applications and they could not afford to keep their system understaffed and poorly managed. When their mainframe system went down, it limited their ability to service their clients, and thus hurt their revenue and profits.
They tried for months to limit their exposure by hiring additional personnel, but because they were in a rural location they weren’t able to attract people with mainframe expertise. They had considered outsourcing just six months before engaging Accelerated Outsourcing, but they only knew of a few large outsourcing vendors and could not find the right vendor for their needs.
After reviewing their technical and business risks, we suggested outsourcing the mainframe environment. We performed an outsourcing cost-benefit analysis that showed the potential for savings. We then wrote an RFP, researched the marketplace for vendors, and ultimately helped them find the best vendor for their needs. It turned out the winning vendor was less than two hours away and the client never knew they existed.
The client was able to reduce their mainframe operating costs by 21% ($3.2 million over 5 years) and limit their exposure due to a lack of staff. Their system is supported 24×7 by a highly trained staff in a state-of-the-art data center with a redundant network and power supply. The vendor also helped them get current on their operating system, and provides them with disaster recovery support.
Outsourcing Not Always Cost Effective
Client kept its mainframe processing in-house as the savings were not significant enough to outsource the mainframe environment.
One of the world’s largest companies engaged in the exploration, production, transportation, and sale of crude oil and natural gas. was interested in benchmarking the internal cost structure of its four mainframe environments, to ensure that its internal costs were in line with current market pricing.
Accelerated Outsourcing was engaged to make sure that Client’s internal costs were competitive with the rest of the marketplace and to see if any financial savings could be realized through outsourcing.
Accelerated Outsourcing helped this Client understand and catalog its internal costs. In a matter of weeks, Accelerated provided the Client with a deliverable that compared the Client’s costs with current market pricing. Accelerated recommended that the Client keep its mainframe processing in-house as the savings were not significant enough to outsource the mainframe environments. Accelerated Outsourcing solutions can be trusted to recommend and provide the right solutions for any client, whether that means a Financial Impact Analysis recommendation that preserves the existing mainframe environment, or the recommendation to pursue mainframe outsourcing based on potential cost-savings and efficiencies.
Company Lowers Risk And Reduces Costs
Insurance company reduces operational risks and saves 22% of mainframe budget by outsourcing their mainframe.
Our client was looking to modernize their mainframe applications. They had a 7-year plan to replace their legacy applications. Their IT staff handled day-to-day operations, mostly focused on “putting out fires.” The company hired a new CIO who wanted his staff to focus on new applications and the strategic initiatives of the business. The CIO also was tasked with cutting operating costs. The IT department was getting hit with high upgrade costs from software providers and wanted to smooth out their capital expenses. And because they were in a rural area, there was a shortage in the mainframe staffing marketplace. They also had problems testing their Disaster Recovery plan.
The company looked at labor arbitrage using outsourced personnel but could never financially justify it or feel comfortable with it – especially since the most economical choices were off-shore. They also had discussions with a large outsourcing vendor. The vendor couldn’t save them any money so the vendor wanted to increase the scope of the project and outsource the applications and the entire data center, a solution that was neither cost-effective nor appealing to the company.
Accelerated Outsourcing was engaged to analyze their mainframe environment. We determined that outsourcing might be a good solution to their problems. Our initial Cost-Benefit Analysis indicated that there was enough savings to generate an RFP and solicit bids from the marketplace. After we developed the RFP and analyzed vendor responses, we helped them negotiate a contract with an excellent vendor.
Our client was able to reduce their operating costs by 22% or $1.1 million annually. The vendor now provides Disaster Recovery testing for them, and has mitigated their risk by processing their environment in a hardened facility. The organization can focus on strategic initiatives and project work instead of day-to-day operations.